IR-2024-285 is out. What moved, and what did not, for 2025.

On November 1, 2024, the IRS released IR-2024-285 and Notice 2024-80. The 2025 cost-of-living adjustments for retirement plans are now public. They are not the limits that govern a paycheck you run in November or December of 2024, and they are not the limits that govern a 2024 cash balance valuation. They take effect for limitation years that begin in 2025. For almost every owner reading this, that means January 1, 2025. The useful skill this week is knowing which column to read.

Sterling Pension Group LLC in West Hartford administers plans and coordinates independent Enrolled Actuaries. We are not an actuarial firm. This briefing is education, not tax, legal, or actuarial advice. The newsroom announcement is IR-2024-285. The standing table, which will carry both years, is the COLA page.

What moved

Set the years side by side and change only the cells the IRS changed.

The employee deferral limit rises from $23,000 in 2024 to $23,500 in 2025. That is a $500 increase. It is real, and it is not a new planning era. If your remaining 2024 payroll can still withhold a deferral, the ceiling on that withholding is $23,000, not the new figure.

The defined contribution annual additions limit rises from $69,000 to $70,000. Compensation that plans may count rises from $345,000 to $350,000. The defined benefit annual benefit limit rises from $275,000 to $280,000. Each of those increases is $5,000. None of them is a cash balance contribution limit. The benefit-limit concept is explained by the IRS here: defined benefit plan benefit limits.

A new catch-up tier begins in 2025 for participants who are ages 60, 61, 62, or 63. That higher catch-up is $11,250. It is not available in 2024. It is not available on a 2024 paycheck just because the announcement exists. How it differs from a pension credit is the subject of /insights/super-catch-up.

What did not move

The ordinary age-50 catch-up stays $7,500 for 2025. Owners who expected the long-standing catch-up to rise because the deferral rose should unexpect it. If you will be 50 or older in 2025 and you will not be in the 60-through-63 window, your catch-up remains $7,500, stacked on a deferral of $23,500.

The IRA dollar limit stays $7,000. A personal IRA was not given a raise in this notice. Do not "gross up" a plan design because you misremembered the IRA line.

The Roth catch-up mandate did not spring into effect because a COLA notice was published. Notice 2023-62 delayed that SECURE 2.0 requirement through 2025. It is not in force for 2024, and it is not in force for 2025. It is scheduled to become operational beginning January 1, 2026, and only then for participants whose prior-year FICA wages exceeded $150,000. It changes how a catch-up is deposited in the 401(k). It does not change a cash balance formula, and it does not change either year's benefit limit. If a payroll provider tells you to flip catch-ups to Roth for January because "SECURE 2.0 is here," send them back to Notice 2023-62. January 2025 is still inside the delay.

No cash balance contribution limit was published, because none exists. A pay credit remains an actuarial number. An illustrative credit you received in September under the $275,000 benefit limit is not automatically $5,000 larger because the 2025 benefit limit is $280,000. The 2025 limit is not in force. Even after it is in force, a $5,000 increase in the annual benefit ceiling does not translate dollar for dollar into this year's deposit. The enrolled actuary remeasures. Anyone who adds $5,000 to last month's illustration and calls it updated is inventing a contribution.

Which year you are actually in

Use 2024 numbers for anything that is still a 2024 fact.

A deferral withheld from a 2024 paycheck is a 2024 deferral, capped at $23,000, plus $7,500 if the catch-up applies. Do not withhold $23,500 in December. Payroll systems that load next year's table early will create excess deferrals that have to be corrected. Ask the payroll provider which limit table is live for the remaining 2024 checks.

Compensation counted for a 2024 plan year is capped at $345,000, not $350,000. If you are setting a W-2 or confirming earned income for a 2024 formula, the extra $5,000 of cap is not available yet. Owners who are already above either cap will not feel this. Owners who are deliberately setting pay near the cap should not overshoot 2024's number in the belief that November's announcement rewrote November.

A cash balance or traditional defined benefit valuation for the 2024 year is measured against the $275,000 annual benefit limit, not $280,000. Minimum funding for a calendar-year plan is generally due September 15, 2025, which is 8.5 months after the 2024 year-end. That deadline's existence in 2025 does not import 2025 limits into the 2024 valuation. Missing the minimum can mean a 10% excise tax on Form 5330. The deduction for the 2024 contribution often follows the due date of the 2024 return, including extensions, under IRC 404(a)(6). Your CPA keeps those dates apart. The new COLA table does not merge them.

Use 2025 numbers for decisions that are truly about 2025: next year's deferral election, next year's compensation policy, and the benefit limit the actuary will apply to a 2025 accrual. You can write those decisions down now. You cannot operate them now. The practical bridge is the December briefing, /insights/december-timing, and the January briefing that will treat the new table as the one that counts, /insights/limits-in-force.

How a cash balance owner should read the benefit-limit line

Start with the official sentence. The maximum annual benefit increased to $280,000 for 2025. Then refuse the unofficial sentence that usually follows it in a sales email: therefore you may contribute $280,000, or $280,000 plus $70,000. Both additions are wrong in any year. They are especially wrong in a year the new limit is not yet effective.

What you may do, this month, is ask the enrolled actuary a narrower question. Holding the census constant, how does an illustrative 2025 credit compare with the illustrative 2024 credit, once each year is measured under its own benefit limit and its own compensation cap? The answer might be a modest change. It might be almost no change, because the owner's constraint was the census, the interest crediting rate, or the assets already in the plan, not the last $5,000 of the statutory benefit. It might matter more for an older owner than for a younger one, which is an actuarial observation, not a table you can photocopy. Until that comparison comes back labeled illustrative, keep last quarter's figure in the same envelope you keep every other uncertified number.

The limits page on this site is the place we separate published IRS figures from illustrations. The illustrations themselves are teaching tools. The calculator is the same kind of tool. None of them became a valuation because the IRS posted a news release.

What the notice does not decide for you

IR-2024-285 does not decide whether you should adopt a plan for 2024. The adoption timing under the SECURE Act, generally through the filing deadline including extensions, was already the law before this notice. Employee deferrals still cannot be made retroactively through payroll. If you have not started, the notice is not a reason to start on a new 2025 number, and it is not a reason to abandon a 2024 design that still fits. The fit test is unchanged: durable cash flow, a census you will fund, and a minimum contribution you can pay. That test is /insights/not-a-fit. The reason most owner designs are a pair, not a pension alone, is unchanged too, and it is written up in /insights/combo-plan.

The notice does not decide PBGC coverage. Coverage remains plan-specific. Many small professional-service employers are exempt when the statutory conditions are met. It is not the case that all small plans are exempt, and a $5,000 movement in a benefit limit has nothing to do with it. The agency's page is PBGC coverage.

The notice does not file your Form 5500. A calendar-year Form 5500 is generally due July 31, extendable to October 15 with Form 5558, on EFAST2. The 2024 form, when it is due in 2025, will describe a 2024 year. Electronic filing of Form 5558 itself is a 2025 administrative change; it is not a reason to file anything this week. The IRS map of the form is the Form 5500 corner. Administration around that filing is part of the plan lifecycle, and the professional cost of valuation plus administration belongs on the fees page rather than in the COLA announcement.

A clean way to brief your CPA and your payroll provider

Send three sentences, not a forwarded sales email.

First: 2024 deferrals remain capped at $23,000, with a $7,500 catch-up if age 50 or older applies, through the last 2024 paycheck. Second: 2025 deferrals will be capped at $23,500, the age-50 catch-up will remain $7,500, and a participant who attains age 60, 61, 62, or 63 in 2025 may have a catch-up of $11,250 if the document allows it, beginning with 2025 payrolls. Third: the cash balance credit is not updated by this notice, and any 2024 deposit will be the number the enrolled actuary certifies under the $275,000 benefit limit.

If payroll cannot show you which table is loaded, assume nothing and ask again. A $500 mistake on a deferral is correctable and still a nuisance. A mistaken belief that the pension contribution rose by $5,000 on November 1 is a larger nuisance, because someone may wire it.

Publication 560 will lag the newsroom by the time it is reprinted. When the booklet and the notice disagree, the notice controls. You do not need to wait for a reprinted booklet to brief your CPA. You do need to stop treating a newsroom headline as a funding instruction.

What to do in the next two weeks

Read the notice against your own year. Do not celebrate it as found money.

• Open IR-2024-285 and write down the seven figures that matter to you: deferral $23,500, age-50 catch-up $7,500, ages 60–63 catch-up $11,250, annual additions $70,000, compensation cap $350,000, defined benefit limit $280,000, IRA $7,000. Mark every one of them "2025, not yet in force."
• Tell payroll to leave 2024 checks on $23,000 and, if applicable, $7,500. Schedule the table change for the first 2025 payroll, not for the last 2024 payroll.
• If a cash balance illustration is in your inbox, ask the actuary to confirm it is still on the 2024 benefit limit of $275,000. Do not add $5,000 yourself.
• If you are ages 60 to 63 next year, or your spouse on payroll is, flag the $11,250 catch-up as a January question. Do not withhold it in 2024.
• Leave Roth catch-up alone. It is delayed through 2025.

If you want those instructions turned into a plan-year checklist, contact Sterling Pension Group. Bring the notice, the census, and the payroll calendar. Leave the uncertified contribution increase at home.