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
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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 Los Angeles, Orange County, Palo Alto and San Diego, California; Phoenix and Tucson, Arizona; 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.
