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Compliance October 2, 2023
Retirement Contribution Limits, COLA Stay on Track With Continuing Resolution
The DC contribution limit was projected to be $23,000 for 2024, and the IRS should stay on track in implementing the change.
Reported by Paul Mulholland
President Joe Biden signed a continuing resolution into law Saturday night that will keep the federal government operating through November 17.
Per the legislation, government departments may spend: “Such amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2023 and under the authority and conditions provided in such Acts, for continuing projects or activities.”
Though departments cannot start new projects that have not been approved by a proper appropriations bill, they may continue with normally scheduled projects or projects that were already underway, according to the legislation.
Those approved projects include the obligation of the Bureau of Labor Statistics to track inflation. The BLS is currently scheduled to publish its inflation numbers for the month of September on October 12, which will in turn allow the Social Security Administration to use the Consumer Price Index for Urban Wage Earners and Clerical Workers to calculate the cost-of-living adjustment for 2024 benefits. Additionally, the Internal Revenue Service uses the Consumer Price Index for All Urban Consumers to calculate the limits on contributions to defined contribution retirement plans.
Lisa Featherngill, the national director of wealth planning at Comerica Bank, says the IRS usually announces its contribution limits in late October and, with the continuing resolution, “we should be able to get that data.”
The continuing resolution ends on November 17, but both the Social Security Administration and IRS will have the inflation data they need by then, so even if the government shuts down in November, the inflation adjustments for 2024 should stay on trac,k because “we should have all the info for 2024 before then,” Featherngill says.
A report by Mercer predicted that the limit for DC plan contributions will be $23,000, based on inflation numbers, but the “IRS usually announces official limits for the coming year in late October or early November,” according to the August report.
Without the resolution to continue government operations, the BLS would have furloughed all employees, according to its shutdown contingency plan. That would have halted the creation of key economic data needed to set the 2024 limits.