Pension Plan Contribution Limits in NetSuite 2025.1

Starting in NetSuite 2025.1, updates were made to the annual limits for pension plan contributions, specifically focusing on elective deferrals and catch-up contributions. These contributions are vital for employees to maximize their retirement savings, and understanding these amounts can help organizations ensure compliance and facilitate accurate payroll processing.

Key Contribution Limits for 2025

The following are the updated contribution limits for various pension plans effective in 2025:

• 408(p) EE Elective Deferrals: $16,500
  This limit applies to elective deferrals made by employees under section 408(p) of the Internal Revenue Code, allowing them to save for retirement on a tax-advantaged basis.

• 408(p) EE Elective Deferrals Catch-Up Regular: $3,500
  For participants aged 50 and over, this catch-up contribution allows them to make additional contributions, helping them boost their retirement funds as they approach retirement age.

• 457(b) Plan Catch-Up (Ages 60-63): $11,250
  This limit is specific for employees aged 60 to 63, allowing them to make higher contributions to a 457(b) plan, which is beneficial for high-earners looking to enhance their retirement savings significantly.

Why This Matters

Understanding these limits is crucial for HR and payroll administrators as miscalculations can lead to compliance issues or employee dissatisfaction. Organizations must ensure that payroll systems are updated accordingly to reflect these new limits starting in 2025.

Who This Affects

• HR Administrators: Responsible for setting up and maintaining employee benefit plans.
• Payroll Administrators: Ensuring payroll systems reflect the new contribution limits.
• Employees: Affects their ability to plan retirement savings effectively.

Key Takeaways

• Annual limits for pension plan contributions are updated.
• Includes changes to 408(p) and 457(b) plan contributions.
• Important for HR and payroll for compliance and employee satisfaction.