Current Payroll Updates For Second Quarter 2024

2025 Limits

  • The maximum annual HSA contribution for an eligible individual with self-only coverage is $4,300 (up from $4,150 in 2024).
  • The maximum annual HSA contribution for family coverage is $8,550 (up from $8,300 in 2024).
  • The 2025 maximum annual out-of-pocket amount for HDHP self-only coverage (including items such as deductibles, copayments, and coinsurance, but not premiums) is $8,300 (up from $8,050 in 2024), and the maximum annual out-of-pocket amount for HDHP family coverage is twice that: $16,600 (up from $16,100 in 2024).
  • The 2025 minimum deductible amounts for HSA-compatible HDHPs are $1,650 (up from $1,600 in 2024) for self-only coverage and $3,300 (up from $3,200 in 2024) for family coverage.

A fiscal year plan that satisfies the requirements for an HDHP on the first day of the first month of its fiscal year may apply that deductible for the entire fiscal year.

In addition, the IRS announced the 2025 maximum amount that may be made available for excepted benefit health reimbursement arrangements (HRAs) is $2,150.

Using the “intermediate” projections, the board projects the social security wage base will be $174,900 in 2025 (up from $168,600 this year) and will increase to $242,700 by 2033. The formal announcement of the 2025 wage base will not come until mid-October.

The projections, which only indicate the expected trend, are based on social security program provisions in current law and do not consider any changes in these provisions that might be made in the future.

  • On July 1, the minimum salary level increases from $684 to $844 per week (or from $35,568 per year to $43,888 per year)
  • On January 1, 2025, the minimum salary level increases from $844 to $1,128 per week (or from $43,888 per year to $58,656 per year)

The final rule also requires the salary level to be updated every three years to match the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. This means that the salary level will be updated on July 1, 2027, and every three years after that.

The final rule increases the salary requirement for highly compensated employees (HCEs) from $107,432 to $132,964 per year on July 1, then from $132,964 to $151,164 per year on January 1, 2025. The HCE level also will be adjusted every three years at the same time as the salary threshold.

These increases will be the first since January 1, 2020. Per the final rule, future updates will occur every three years starting January 1, 2027.

While the final rule affects a large portion of the U.S. workforce, the DOL regulations remain unchanged for the earnings thresholds for white-collar exempt employees in U.S. territories, the motion picture industry, and computer employees. Also unchanged is the treatment of bonuses to satisfy the compensation threshold. Employers may use nondiscretionary bonuses and incentive payments (including commissions) to meet up to 10% of white-collar employees’ standard salary test requirements as long as the bonuses are paid annually. Additionally, employers may use nondiscretionary bonuses and incentive payments earned during 52 weeks to calculate the compensation threshold for the HCE exemption, so long as they are not used to satisfy the weekly standard salary level portion of the exemption test.

Many of the items outlined in the SECURE 2.0 Act are optional. Although these provisions impact plans in 2023 and 2024, the expected date of the legislative amendment will be due by the end of the 2026 plan year, allowing time for careful consideration.

The requirement of most concern to small businesses that have an hour-based requirement for 401k qualification is the new 500-hour qualification available to long-term part-time employees.

  • Increase in age for Required Minimum Distributions(RMD) – Required
  • Employer matching and nonelective contributions on a Roth basis – Optional
  • Employee self-certification of hardship withdrawals – Optional
  • Streaming rules for withdrawals from retirement funds for disaster relief – Optional
  • Eliminating unnecessary plan requirements related to unenrolled participants – Optional
  • Long-term, part-time worker qualifications – Required
  • Catch-up contributions as Roth for higher earners – Required
  • Auto-enrollment requirements for start-up plans – Required
  • Increase in small amount force-out (SAFO) distribution threshold – Optional
  • Matching student loan debt repayment – Optional
  • Emergency expense withdrawals – Optional
  • Domestic abuse withdrawals – Optional
  • Small / medium business (SMB) tax credits – Optional

The details of each of these items should be reviewed with your retirement plan provider or a qualified legal advisor.