{"id":31883,"date":"2023-11-03T15:39:33","date_gmt":"2023-11-03T15:39:33","guid":{"rendered":"https:\/\/isafespend.com\/personal-finance\/taxes\/retirement-saving-2024-irs-limits-on-qualified-401k-plans-affect-nonqualified-plans\/"},"modified":"2023-11-03T15:39:35","modified_gmt":"2023-11-03T15:39:35","slug":"retirement-saving-2024-irs-limits-on-qualified-401k-plans-affect-nonqualified-plans","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=31883","title":{"rendered":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans"},"content":{"rendered":"
\n

The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives who can participate in company nonqualified deferred compensation (NQDC) plans.<\/p>\n

Here\u2019s why. For most NQDC plan participants, year-end is the time to be like an autumn squirrel and decide how much to put away for the future. November and December are when they choose how much of next year\u2019s salary to defer beyond the 401(k) limits. Factors in that decision about nonqualified <\/em>plans include the newly released IRS limits that apply to qualified<\/em> retirement plans.<\/p>\n

How The 2024 IRS Qualified Plan Limits Affect Nonqualified Deferrals<\/h2>\n

Generally, you defer income via nonqualified plans only when you know you will max out your yearly contributions to qualified plans. Therefore, the contribution limits set by the IRS on qualified plans, adjusted annually for inflation, are important for NQDC planning.<\/p>\n

If you\u2019ve already maxed out your qualified plan contributions for 2023, you will probably do the same in 2024<\/strong>, so you will need NQDC plans to defer any salary and bonus increases you expect in 2024. Your motivation to defer may be boosted further if you believe tax increases are on the way and will affect you.<\/p>\n

<\/fbs-ad><\/p>\n

2024 IRS Contribution Limits For Qualified Plans<\/h2>\n

The IRS changes in limits for 2024 are much smaller than the increases for 2023 because these adjustments are based on the inflation rate, which has moderated. Here are the key annual contribution limits on qualified retirement plans for 2024, <\/strong>with the 2023 limits in parentheses:<\/p>\n

Elective compensation deferrals, such as 401(k) and 403(b)<\/em>: $23,000 <\/strong>(up from $22,500)<\/p>\n

Compensation limit in calculation of qualified deferral and match<\/em>: $345,000 <\/strong>(up from $330,000)<\/p>\n

Catchup contribution for people aged 50 or older<\/em>: $7,500 <\/strong>(no change)<\/p>\n

Total defined contribution limit (employee and employer contributions)<\/em>: $69,000<\/strong> + catchup contribution (up from $66,000<\/strong> + catchup)<\/p>\n

Defined benefit plan payout limit<\/em>: $275,000 <\/strong>(up from $265,000)<\/p>\n

Income threshold defining <\/em>key employees<\/em> for top-heavy plans and six-month delay on payout upon separation<\/em>: $220,000 <\/strong>(up from $215,000)<\/p>\n

Income threshold defining <\/em>highly compensated employees<\/em> for <\/em>nondiscrimination<\/em> testing<\/em>: $155,000<\/strong> (up from $150,000)<\/p>\n

Qualified Versus Nonqualified Retirement Plans<\/h2>\n

The yearly contribution limits for qualified retirement plans are a big reason why companies offer nonqualified <\/em>plans: to let executives and other highly compensated employees save extra money for retirement with an elective nonqualified plan or an excess 401(k) plan. The deferred income is \u201cnonqualified\u201d because it does not fit the rules in the tax code that allow tax-qualified plans, such as 401(k) and 403(b) plans.<\/p>\n

Nonqualified deferred comp allows you to put away amounts beyond the permissible contribution amounts of standard qualified retirement plans. For retirement planning, it can therefore bridge the considerable gap that arises between the amount of income that you will actually need in retirement and the amount of income that can be provided via your 401(k) plans and Social Security.<\/p>\n

Nonqualified Deferrals Have Complex Rules<\/h2>\n

Nonqualified deferred compensation plans and their participants must follow the complex rules under Section 409A of the US tax code. These rules govern your deferral and distribution elections. The amounts that you defer can only be informally funded by your company, and they are at risk should the company enter bankruptcy proceedings.<\/p>\n

The website myNQDC.com is a comprehensive resource on NQDC plans, including the basics, the deferral\/distribution process, the risks, and the related financial and tax planning.<\/p>\n

Social Security Wage Cap Also Rises In 2024<\/span><\/h2>\n

Set by the Social Security Administration, the Social Security wage cap will rise to $168,600 in 2024<\/strong>, up from $160,200 in 2023.<\/p>\n

With the 6.2% rate of Social Security tax, the maximum possible Social Security withholding is $9,932.40 in 2023 <\/strong>and will rise to $10,453.20 in 2024<\/strong>.<\/p>\n

Social Security tax (up to the yearly limit) and Medicare tax (uncapped) are withheld at the time of deferral, as shown by an FAQ at myNQDC with an annotated diagram of Form W-2 showing where these amounts are included.<\/p>\n

Further Resources<\/h2>\n

For a table comparing the features of 401(k) plans and NQDC plans, and their relative advantages and disadvantages, see an FAQ at myNQDC.com. See also the website\u2019s FAQ on the top NQDC-related issues in year-end planning.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives who can participate in company nonqualified deferred compensation (NQDC) plans. Here\u2019s why. For most NQDC plan participants, year-end is the time to be like an autumn squirrel and decide how much to<\/p>\n","protected":false},"author":1,"featured_media":31884,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[],"class_list":{"0":"post-31883","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-taxes"},"yoast_head":"\nRetirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend<\/title>\n<meta name=\"description\" content=\"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/isafespend.com\/?p=31883\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend\" \/>\n<meta property=\"og:description\" content=\"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives\" \/>\n<meta property=\"og:url\" content=\"https:\/\/isafespend.com\/?p=31883\" \/>\n<meta property=\"og:site_name\" content=\"iSafeSpend\" \/>\n<meta property=\"article:published_time\" content=\"2023-11-03T15:39:33+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-03T15:39:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/11\/1699025973_0x0.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1599\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/isafespend.com\/?p=31883#article\",\"isPartOf\":{\"@id\":\"https:\/\/isafespend.com\/?p=31883\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/isafespend.com\/#\/schema\/person\/5b8c1c75336efaf09b163cd1eab0c9bf\"},\"headline\":\"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans\",\"datePublished\":\"2023-11-03T15:39:33+00:00\",\"dateModified\":\"2023-11-03T15:39:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/isafespend.com\/?p=31883\"},\"wordCount\":685,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/isafespend.com\/#organization\"},\"articleSection\":[\"Taxes\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/isafespend.com\/?p=31883#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/isafespend.com\/?p=31883\",\"url\":\"https:\/\/isafespend.com\/?p=31883\",\"name\":\"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend\",\"isPartOf\":{\"@id\":\"https:\/\/isafespend.com\/#website\"},\"datePublished\":\"2023-11-03T15:39:33+00:00\",\"dateModified\":\"2023-11-03T15:39:35+00:00\",\"description\":\"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives\",\"breadcrumb\":{\"@id\":\"https:\/\/isafespend.com\/?p=31883#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/isafespend.com\/?p=31883\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/isafespend.com\/?p=31883#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/isafespend.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/isafespend.com\/#website\",\"url\":\"https:\/\/isafespend.com\/\",\"name\":\"Solutions For Real\",\"description\":\"Latest Finance News and Updates\",\"publisher\":{\"@id\":\"https:\/\/isafespend.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/isafespend.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/isafespend.com\/#organization\",\"name\":\"Solutions For Real\",\"url\":\"https:\/\/isafespend.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/isafespend.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/sf-logo-1.png\",\"contentUrl\":\"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/sf-logo-1.png\",\"width\":690,\"height\":64,\"caption\":\"Solutions For Real\"},\"image\":{\"@id\":\"https:\/\/isafespend.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/isafespend.com\/#\/schema\/person\/5b8c1c75336efaf09b163cd1eab0c9bf\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/isafespend.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1691264579-96x96.png\",\"contentUrl\":\"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1691264579-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/isafespend.com\"],\"url\":\"https:\/\/isafespend.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend","description":"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/isafespend.com\/?p=31883","og_locale":"en_US","og_type":"article","og_title":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend","og_description":"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives","og_url":"https:\/\/isafespend.com\/?p=31883","og_site_name":"iSafeSpend","article_published_time":"2023-11-03T15:39:33+00:00","article_modified_time":"2023-11-03T15:39:35+00:00","og_image":[{"width":1599,"height":900,"url":"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/11\/1699025973_0x0.jpg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/isafespend.com\/?p=31883#article","isPartOf":{"@id":"https:\/\/isafespend.com\/?p=31883"},"author":{"name":"News Room","@id":"https:\/\/isafespend.com\/#\/schema\/person\/5b8c1c75336efaf09b163cd1eab0c9bf"},"headline":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans","datePublished":"2023-11-03T15:39:33+00:00","dateModified":"2023-11-03T15:39:35+00:00","mainEntityOfPage":{"@id":"https:\/\/isafespend.com\/?p=31883"},"wordCount":685,"commentCount":0,"publisher":{"@id":"https:\/\/isafespend.com\/#organization"},"articleSection":["Taxes"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/isafespend.com\/?p=31883#respond"]}]},{"@type":"WebPage","@id":"https:\/\/isafespend.com\/?p=31883","url":"https:\/\/isafespend.com\/?p=31883","name":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans | iSafeSpend","isPartOf":{"@id":"https:\/\/isafespend.com\/#website"},"datePublished":"2023-11-03T15:39:33+00:00","dateModified":"2023-11-03T15:39:35+00:00","description":"The IRS just released the 2024 contribution limits on qualified retirement plans, such as your 401(k). That\u2019s crucial info for employees and executives","breadcrumb":{"@id":"https:\/\/isafespend.com\/?p=31883#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/isafespend.com\/?p=31883"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/isafespend.com\/?p=31883#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/isafespend.com\/"},{"@type":"ListItem","position":2,"name":"Retirement Saving: 2024 IRS Limits On Qualified 401(k) Plans Affect Nonqualified Plans"}]},{"@type":"WebSite","@id":"https:\/\/isafespend.com\/#website","url":"https:\/\/isafespend.com\/","name":"Solutions For Real","description":"Latest Finance News and Updates","publisher":{"@id":"https:\/\/isafespend.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/isafespend.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/isafespend.com\/#organization","name":"Solutions For Real","url":"https:\/\/isafespend.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/isafespend.com\/#\/schema\/logo\/image\/","url":"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/sf-logo-1.png","contentUrl":"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/sf-logo-1.png","width":690,"height":64,"caption":"Solutions For Real"},"image":{"@id":"https:\/\/isafespend.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/isafespend.com\/#\/schema\/person\/5b8c1c75336efaf09b163cd1eab0c9bf","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/isafespend.com\/#\/schema\/person\/image\/","url":"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1691264579-96x96.png","contentUrl":"https:\/\/isafespend.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1691264579-96x96.png","caption":"News Room"},"sameAs":["https:\/\/isafespend.com"],"url":"https:\/\/isafespend.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/posts\/31883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/isafespend.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31883"}],"version-history":[{"count":1,"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/posts\/31883\/revisions"}],"predecessor-version":[{"id":31885,"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/posts\/31883\/revisions\/31885"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/isafespend.com\/index.php?rest_route=\/wp\/v2\/media\/31884"}],"wp:attachment":[{"href":"https:\/\/isafespend.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/isafespend.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/isafespend.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}