ADP & ACP Testing
As the IRS offers tax saving and tax deferred savings in employer sponsored retirement plans, they want to ensure that not only owners and highly
Each year the U.S. government adjusts the limits for qualified plans and Social Security to reflect cost-of-living adjustments and changes in the law. Many of these limits are based on the “plan year” as defined in the plan document. The elective deferral and catch-up limits are always based on the calendar year.
| Limitation | 2025 | 2024 | 2023 |
|---|---|---|---|
| Maximum annual pretax and/or Roth elective deferrals for employees under age 50 (401(k), 403(b), and governmental 457(b) plans). | $23,500 | $23,000 | $22,500 |
| “Catch-up” pretax and/or Roth contribution for employees who turn age 50 by the last day of the calendar year (401(k), 403(b), and governmental 457(b) plans). | $7,500 | $7,500 | $7,500 |
| “Catch-up” pretax and/or Roth contribution for employees who are age 60-63 by the last day of the calendar year (401(k), 403(b), and governmental 457(b) plans). | $11,250 | N/A | N/A |
| Maximum annual additions limit of combined employee and employer contributions for 401(k) or 403(b) plans (Catch-up contributions are not counted towards limit). | $70,000 | $69,000 | $66,000 |
| Income limit used to determine following years highly compensated employees (HCE). “HCE” in 2022 will include an employee paid more than $130,000 in 2021. “HCE” in 2023 will include an employee paid more than $135,000 in 2022. “HCE” in 2024 will include an employee paid more than $150,000 in 2023. | $160,000 | $155,000 | $150,000 |
| Annual Compensation Limit (Compensation above this limit is not counted for plan purposes). | $350,000 | $345,000 | $330,000 |
| Date | Description |
|---|---|
| January 1 | New Annual Limits Apply |
| March 15 (Or the first business day following) | Return of excess contributions for failed ADP and ACP Tests |
| March 15 (Or the first business day following) | Employer contributions due for calendar year partnerships, S Corps, and LLCs taxed as partnerships (unless tax extension is filed). |
| April 1 | Initial Required Minimum Distributions must be made |
| April 15 (Or the first business day following) | Employer contributions due for corporations and LLCs taxed as corporations (unless tax extension is filed). |
| June 30 (Or the first business day following) | Return of excess contributions for failed ADP and ACP Tests for EACA Plans (only) |
| July 31 (Or the first business day following) | IRS Form 5500 and schedules due (unless extension form 5558 is filed by this date). |
| September 30 | Summary Annual Report (SAR) to be distributed to participants and beneficiaries (unless extension form 5558 is filed). |
| October 15 (Or the first business day following) | IRS Form on IRS Form 5558 Extension Due |
| December 1 | Distribution of Annual Notices |
| December 15 | Summary Annual Report (SAR) to be distributed to participants and beneficiaries for plans that filed a 5558. |
| December 31 | Ongoing Required Minimum Distributions must be made |
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