Publication
2025 End-of-Year Plan Sponsor “To Do” List (Part 2) Annual Cost of Living Adjustments
As is tradition, we are happy to present our End-of-Year Plan Sponsor “To Do” Lists. We are publishing our “To Do” Lists in four separate SW Benefits Updates. Part 1 covered year-end health and welfare plan issues. This Part 2 describes annual cost-of-living increases and includes a summary table of penalties, percentages, and premiums under the employer shared responsibility requirements of Code Section 4980H. Parts 3 and 4 will cover qualified plan and executive compensation issues. Each SW Benefits Update provides a checklist of items to consider before the end of 2025 or in early 2026.
As always, we appreciate your relationship with Snell & Wilmer and hope that these “To Do” Lists can help focus your efforts over the next few months.
Part 2 – Annual Cost of Living Adjustments “To Do” List
| Qualified Retirement Plan Dollar Limits | 2024 | 2025 | 2026 |
|---|---|---|---|
| Limit on Section 401(k) Deferrals Section 402(g) |
$23,000 | $23,500 | $24,500 |
| Limit on Catch-up Contributions Section 414(v)(2)(B)(i) |
$7,500 | $7,500 | $8,000 | Special Limit on Catch-up Contributions for Individuals Who Attain Age 60-63 During Year Section 414(v)(2)(E)(i) |
– | $11,250 | $11,250 | Compensation Threshold for Required Roth Catch-up Contributions Section 414(v)(7)(A) |
$145,000 in 20231 | $145,000 in 20241 | $150,000 in 2025 |
| Limit on Deferrals for Government and Tax-Exempt Organization Deferred Compensation Plans Section 457(e)(15) |
$23,000 | $23,500 | $24,500 |
| Annual Benefit Limit for Defined Benefit Plans Section 415(b)(1)(A) |
$275,000 | $280,000 | $290,000 |
| Limit on Annual Contributions to Defined Contribution Plans Section 415(c)(1)(A) |
$69,000 | $70,000 | $72,000 |
| Limit on Compensation Considered by Qualified Retirement Plans Section 401(a)(17) |
$345,000 | $350,000 | $360,000 |
| Dollar Amount for the Definition of Highly Compensated Employee Section 414(q)(1)(B) |
$155,000 | $160,000 | $160,000 |
| Dollar Amount for the Definition of a Key Employee in a Top-Heavy Plan Section 416(i)(1)(A)(i) |
$220,000 | $230,000 | $235,000 |
| Dollar Amount for Determining the Maximum Account Balance in an ESOP Subject to Five-Year Distribution Period Section 409(o)(1)(C)(ii) |
$1,380,000 | $1,415,000 | $1,455,000 |
| SIMPLE Retirement Account Limitation Section 408(p)(2)(E) |
$16,000 | $16,500 | $17,000 |
| Social Security Taxable Wage Base | $168,600 | $176,100 | $184,500 |
| Health & Welfare Plan Dollar Limits | 2024 | 2025 | 2026 |
|---|---|---|---|
| Annual Cost Sharing Limit (self-only) | $9,450 | $9,200 | $10,600 |
| Annual Cost Sharing Limit (other than self-only) | $18,900 | $18,400 | $21,200 |
| HDHP Out-of-Pocket Maximum (self-only) | $8,050 | $8,300 | $8,500 |
| HDHP Out-of-Pocket Maximum (family) | $16,100 | $16,600 | $17,000 |
| Annual HDHP Deductible (self-only) | Not less than $1,600 | Not less than $1,650 | Not less than $1,700 |
| Annual HDHP Deductible (family) | Not less than $3,200 | Not less than $3,300 | Not less than $3,400 |
| Maximum Annual HSA Contributions (self-only) | $4,150 | $4,300 | $4,400 |
| Maximum Annual HSA Contributions (family) | $8,300 | $8,550 | $8,750 |
| Maximum HSA Catch-Up Contribution | $1,000 | $1,000 | $1,000 |
| Health Flexible Spending Account Maximum | $3,200 | $3,300 | $3,400 |
| Patient-Centered Outcomes Research Institute (PCORI) Fees | Plan Years ending 10/01/2023 to 09/30/2024 | Plan Years ending 10/01/2024 to 09/30/2025 | Plan Years ending 10/01/2025 to 09/30/2026 |
|---|---|---|---|
| Annual PCORI Fee Code Sections 4375(a) and 4376(a) |
$3.22 | $3.47 | $3.84 |
| Code Section 4980H Amounts | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|
| Code Section 4980H(a) Penalty (95% Test) | $2,880 annual / $240 monthly | $2,970 annual / $247.50 monthly | $2,900 annual / $241.67 monthly | $3,340 annual / $278.34 monthly |
| Code Section 4980H(b) Penalty (Affordability) | $4,320 annual / $360 monthly | $4,460 annual / $371.67 monthly | $4,350 annual / $362.50 monthly | $5,010 annual / $417.50 monthly |
| Affordability Safe Harbor Percentage | 9.12% | 8.39% | 9.02% | 9.96% |
| Federal Poverty Level for 48 Contiguous United States | $14,580 | $15,060 | $15,650 | To be announced in early 2026 |
| Allowable Monthly Premium for Calendar Year Plans (Federal Poverty Level) | $13,590 x .0912/12 = $103.28 or $14,580 x .0912/12 = $110.81 |
$14,580 x .0839/12 = $101.94 or $15,060 x .0839/12 = $105.29 |
$15,060 x .0902/12 = $113.20 or $15,650 x .0902/12 =$117.64 |
$15,650 x .0996/12 = $129.90 or $__ x .0996/12 =* |
* Pending Updated Federal Poverty Level
Footnotes
-
Pursuant to IRS Notice 2023-62, the requirements of Code Section 414(v)(7)(A) will be treated as satisfied until taxable years beginning after December 31, 2025.
About Snell & Wilmer
Founded in 1938, Snell & Wilmer is a full-service business law firm with more than 500 attorneys practicing in 17 locations throughout the United States and in Mexico, including Phoenix and Tucson, Arizona; Los Angeles, Orange County, Palo Alto and San Diego, California; Denver, Colorado; Washington, D.C.; Boise, Idaho; Las Vegas and Reno-Tahoe, Nevada; Albuquerque, New Mexico; Portland, Oregon; Dallas, Texas; Salt Lake City, Utah; Seattle, Washington; and Los Cabos, Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals and entrepreneurs. For more information, visit swlaw.com.
