2024 Increases for Retirement Plans, Social Security

The Social Security Administration just announced benefit increases effective in 2024. Current retirees will receive a cost-of-living increase, beginning in January 2024, of 3.2%, reflecting the increase in CPI-W between the 3rd quarter of 2022 and the 3rd quarter of 2023.

In addition, the maximum amount of earnings subject to Social Security tax will increase in 2023 from $160,200 to $168,600, based on a 5.3% increase in the ‘national average wage’ during 2022.

These changes will affect benefits for currently retired individuals, as well as those contemplating retirement. Employers who sponsor retirement plans that are ‘coordinated’ with Social Security in some fashion will also see an impact on benefits earned and payable under such plans.

IRS limits

IRS will soon release limits applicable to retirement plans for various purposes in 2024, based on a 3.51% increase in CPI-U between the 3rd quarter of 2022 and the 3rd quarter of 2023. Based on this increase, we expect increases in most limits applicable to retirement plans in 2024. The table below summarizes our calculations for 2024, along with values for 2023 and 2022:

PBGC amounts

The increase in national average wages also drives some key amounts used in calculating PBGC premiums. Relevant amounts for 2024 (along with 2023 and 2022) are summarized below:

The PBGC headcount premium and variable premium cap are indexed to increases in the national average wage. 2024 amounts reflect a 5.3% increase in the national average wage during 2022.