Every year many dollar limits, penalties, and other factors affecting benefit plans, are adjusted for the cost of living. Most but not all of these metrics have increased for 2025.
Retirement Plans
All of the dollar amounts affecting retirement plan benefits increased, or in a few cases, remained the same for 2025. The maximum elective deferral participants can contribute to a 401(k) plan increased by $500 to $23,500. And while age 50+ catch-up contributions stayed the same at $7,500, the so-called “super catch-up” contributions for those age 60, 61, 62, or 63 became effective, allowing up to $11,325 in additional deferrals for those in that age group.
Health and Welfare Plans
The various metrics affecting health and welfare plans were more varied. They increased in some cases, stayed the same in others, and decreased in yet others. The maximum annual contribution to a health savings account (“HSA”) increased for 2025, as did the high deductible health plan minimum deductible and maximum out-of-pocket expense for HSA-eligible plans. The Affordable Care Act (“ACA”) maximum out-of-pocket expense, and penalties for failures to make ACA-required offers of minimum essential coverage or failure to offer sufficient value or affordability all were reduced. The percentage for the affordability threshold increased generally allowing some increase in the cost of premiums to employees of applicable large employers for 2025. Health flexible spending account maximum contributions and maximum carry-overs also increased.
Next Steps
All of these adjustments should be communicated to plan participants, updated in administrative systems, forms. It is also important that employers ensure that plan documents are reviewed for these adjustments and amended if necessary.
Updated Charts
To see the full charts with all of the benefit plan adjustments for 2025, as well as a comparison to the 2024 numbers, see our Annual Benefits Dollar Limits page.