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$22,500 for 2023 and $23,000 for 2024. These limits ap-
ply for participants in SARSEPs, 401(k) plans (excluding
SIMPLE plans), section 403(b) plans, and section 457(b)
plans.
Defined contribution limits for 2023 and 2024. The
limit on contributions, other than catch-up contributions,
for a participant in a defined contribution plan is $66,000
for 2023 and increases to $69,000 for 2024.
Defined benefit limits for 2023 and 2024. The limit on
annual benefits for a participant in a defined benefit plan is
$265,000 for 2023 and increases to $275,000 for 2024.
SIMPLE plan salary reduction contribution limits for
2023 and 2024. The limit on salary reduction contribu-
tions, other than catch-up contributions, is $15,500 for
2023 and increases to $16,000 for 2024.
Catch-up contribution limits for 2023 and 2024. A
plan can permit participants who are age 50 or over at the
end of the calendar year to make catch-up contributions in
addition to elective deferrals and SIMPLE plan salary re-
duction contributions. The catch-up contribution limit for
defined contribution plans other than SIMPLE plans is
$7,500 for 2023 and 2024. The catch-up contribution limit
for SIMPLE plans is $3,500 for 2023 and 2024.
A participant's catch-up contributions for a year can't
exceed the lesser of the following amounts.
•
The catch-up contribution limit.
•
The excess of the participant's compensation over the
elective deferrals that aren’t catch-up contributions.
See Catch-up contributions under Contribution Limits and
Limit on Elective Deferrals in chapters 3 and 4, respec-
tively, for more information.
Required minimum distributions (RMDs). Individuals
who reach age 72 after December 31, 2022, may delay re-
ceiving their RMDs until April 1 of the year following the
year in which they turn age 73. This change in the age for
making these beginning RMDs applies to both IRA own-
ers and participants in a qualified retirement plan.
Plans established after end of taxable year. For 2023
and later years, a sole-proprietor with no employees can
adopt a section 401(k) plan after the end of the taxable
year, provided the plan is adopted by the tax filing dead-
line (without regard to extensions).
Increased small employer pension plan startup cost
credit. The Secure 2.0 Act of Division T of the Consolida-
ted Appropriations Act, 2023, P.L. 117-328 (SECURE 2.0
Act), provides that eligible employers with 1–50 employ-
ees are eligible for an increased small employer pension
plan startup cost credit under section 45E of 100% of
qualified startup costs, subject to limitation. The credit for
eligible employers with 51–100 employees remains at
50% of qualified startup costs, subject to limitation. See
the instructions to Form 3800 and Form 8881 for more in-
formation on the startup cost credit.
Employer contributions credit. The Secure 2.0 Act
added an additional startup cost credit under section 45E
available to certain eligible employers, in an amount equal
to an applicable percentage of the employer’s
contributions (not including an elective deferral, as defined
in section 402(g)(3)) to an eligible employer plan, subject
to limitation. See the instructions to Form 3800 and Form
8881 for more information on the employer contributions
credit.
Small employer military spouse participation credit.
The Secure 2.0 Act added a new military spouse partici-
pation credit under section 45AA available to eligible small
employers who maintain defined contribution plans with
specific features that benefit military spouses. See the in-
structions to Form 3800 and Form 8881 for more informa-
tion on the military spouse participation credit.
Designated Roth nonelective contributions and des-
ignated Roth matching contributions. The Secure 2.0
Act of 2022 permits certain nonelective contributions and
matching contributions that are made after December 29,
2022, to be designated as Roth contributions.
Reminders
Small employer automatic enrollment credit. The Fur-
ther Consolidated Appropriations Act, 2020, P.L. 116-94,
added section 45T. An eligible employer may claim a tax
credit if it includes an eligible automatic contribution ar-
rangement under a qualified employer plan. The credit
equals $500 per year over a 3-year period beginning with
the first tax year in which it includes the automatic contri-
bution arrangement, and may first be claimed on the em-
ployer’s return for the year 2020.
Increase in credit limitation for small employer plan
startup costs. The Further Consolidated Appropriations
Act, 2020, P.L. 116-94, amended section 45E. For tax
years beginning after December 31, 2019, eligible em-
ployers can claim a tax credit for the first credit year and
each of the 2 tax years immediately following. The credit
equals 50% of qualified startup costs, up to the greater of
(a) $500; or (b) the lesser of (i) $250 for each employee
who is not a “highly compensated employee” eligible to
participate in the employer plan, or (ii) $5,000.
Note. The SECURE 2.0 Act further amended section
45E to increase the credit for tax years beginning after De-
cember 31, 2022. See What’s New.
See the instructions for Form 3800 and Form 8881 for
more information on the small employer automatic enroll-
ment credit and the small employer startup cost credit.
Restriction on conditions of participation. Effective
for plan years beginning after December 31, 2020, a
401(k) plan can’t require, as a condition of participation,
that an employee complete a period of service that ex-
tends beyond the close of the earlier of (a) 1 year of serv-
ice, or (b) the first period of 3 consecutive 12-month peri-
ods (excluding 12-month periods beginning before
January 1, 2021) during each of which the employee has
completed at least 500 hours of service. Effective for plan
years beginning after December 31, 2024, 3 consecutive
12-month periods are reduced to 2 consecutive 12-month
periods.
Retirement savings contributions credit. Retirement
plan participants (including self-employed individuals)
2 Publication 560 (2023)