The IRS and Social Security Administration released the health, retirement, and payroll contribution limits for 2024. Many contribution limits have increased from 2023 levels due to inflation.
- Social Security COLA. Social Security and Supplemental Security Income benefits will increase 3.2 percent in 2024. This rate is calculated based on the Consumer Price Index from the Department of Labor’s Bureau of Labor Statistics. Based on the increase, the maximum amount of earnings subject to the Social Security tax will increase to $168,600 in 2024 from $160,200 in 2023.
- Health FSA Limit. Contributions to a health flexible spending account plan are capped at $3,200 for 2024 which is a $150 increase from 2023. The maximum permissible carryover amount is increased $30 to $640.
- Dependent Day Care FSA Limit. The $5,000/$2,500 contribution limit for dependent day care flexible spending account plans remains unchanged for 2024.
- Qualified Transportation Limit. The monthly maximum amount that may be excluded from income for qualified parking benefits is $315 in 2024. The combined monthly limit for transit passes and vanpooling expenses is also $315.
- Adoption Expenses. The maximum amount that may be excluded from gross income under an employer-provided adoption assistance program for the adoption of a child will be $16,810 in 2024, an increase from $5,950 in 2023. The excludable amount begins to phase out for taxpayers with modified adjusted gross income in excess of $252,150.
- Retirement Plans. The elective deferral limit for 401(k) plans will increase to $23,000 in 2024 and the catch-up limit will remain unchanged at $7,500.
Employers should administer their 2024 plans in compliance with inflation adjustments. For a full listing of the revised limits, refer to the IRS bulletin which may be accessed by clicking here.
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