Year-End Reminders & Updates
As we close out 2024 and start looking ahead to 2025, we wanted to share some important information regarding your 401(k) plan. Below you can find details on year-end compliance needs, tax credit opportunities and the newly released contribution limits for 2025.
Year-End Compliance
As part of their duties as plan administrator, Alerus, conducts annual compliance testing to ensure the plan meets all requirements. In the second half of December, you will receive an email from Alerus requesting the items they need to complete testing, which include census data and a completed compliance questionnaire. If you do not receive the email or have questions about the requirements, please contact us by calling 888.388.8627 or emailing support@accessretirementsolutions.com.
Additional Resources:
2025 Contribution Limits
The IRS adjusts 401(k) contribution limits to account for inflation and cost of living increases. Understanding these limits is important for your employees’ retirement savings strategies as well as the company’s budgeting and benefits communications. Here are the 2025 limits and how they compare to 2024:
| Contribution Type | 2024 Limit | 2025 Limit |
|---|---|---|
| Employee Contributions | $23,000 | $23,500 |
| Employee + Employer Contributions | $69,000 | $70,000 |
| Catch-Up Contribution (Age 50+) | $7,500 | $7,500 |
| Additional Catch-Up Contribution (Age 60-63) | n/a | $3,750 |
Additional Resources:
Tax Credit Reminder
The SECURE Act and SECURE 2.0 introduced several valuable tax credits in an effort to encourage businesses to offer retirement savings benefits to their employees. The credits are available to businesses with 100 or fewer employees and are designed to significantly reduce the costs of establishing and maintaining a 401(k) plan. We always recommend discussing eligibility and credit amounts with a tax professional who’s familiar with your organization, but we wanted to share some resources to give you a better understanding of the credits to help you determine whether they are worth exploring further.
| Credit description | Credit amount | Period | Eligible Employer Size |
|---|---|---|---|
| Plan Startup Credit | $500 - $5,000/year | 3 Years |
1-50: up to 100% of plan costs
51-100: up to 50% of costs |
| Automatic Enrollment Credit | $500/year | 3 Years | 100 or fewer employees, added auto-enrollment to new or existing plan |
| Employer Contribution Credit | Up to $1,000/eligible employee/year, $50,000 max | 5-Year Phaseout | 100 or fewer employees with 2% credit reduction for each employee over 50 |
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