3868 / What are the Section 415 limits for qualified plans?
IRC Section 415 sets maximum levels for the annual contributions that may be made for any one participant under a defined contribution plan and the maximum accruals for participants under a defined benefit plan. A plan is qualified only if the plan document precludes the possibility that benefits or contributions will exceed the limitations set forth in IRC Section 415 for any limitation year.1
For limitation years beginning in 2024, the highest annual benefit payable that may be paid under a defined benefit plan or under all such plans aggregated, if the employer has more than one, at the plan’s normal retirement age (that is, at least 62) must not exceed the lesser of 100 percent of the participant’s average compensation during his or her high three years of service, or $280,000 (in 2025).2 See Q 3719 for further discussion on the application of the Section 415 limits to defined benefit plans.
The contribution limits applicable to defined contribution plans generally are referred to as the “annual additions limit.” The annual additions limit is the maximum total allocation permitted to a participant’s account (this calculation includes all such accounts in any defined contribution plan of the employer). The annual additions for any participant under a defined contribution plan must not exceed the lesser of 100 percent of the participant’s compensation or $70,000 in 2025 ($69,000 in 2024, $66,000 in 2023, and $61,000 in 2022).3 See Q 3728 for details on the application of the Section 415 limits to defined contribution plans. All allocations to the account (other than “catch-up” contributions to a 401(k) plan and investment earnings) including salary deferrals, employer match, employer profit sharing contributions, employee contributions, and forfeiture reallocations are included as an annual addition in applying this limit.