IRS Issues Covered Compensation Tables for 2024

The IRS on Dec. 18 issued tables of covered compensation under Internal Revenue Code (IRC) Section 401(l)(5)(E) and the Income Tax Regulations thereunder for the 2024 plan year. The tables are contained in Revenue Ruling (Rev. Rul.) 2024-01. 

Rev. Rul. 2024-01 states that for purposes of determining covered compensation for the 2024 year, the taxable wage base is $168,600.

The taxable wage base the IRS set for 2024 is $8,400 higher than that set for purposes of determining covered compensation for the 2023 year, which was $160,200. 

Background

IRC Section 401(l)(5)(E)(i) defines covered compensation as the average of the contribution and benefit bases in effect under Section 230 of the Social Security Act for each year in the 35-year period ending with the year in which the employee attains Social Security retirement age. 

IRC Section 401(l)(5)(E)(ii) states that the determination for any year preceding that in which the employee attains Social Security retirement age shall be made by assuming that there is no increase in covered compensation after the determination year and before the employee reaches that age. Treas. Reg. §1.401(l)-1(c)(34) defines the taxable wage base as the contribution and benefit base under Section 230 of the Social Security Act.

Tables 

The revenue ruling provides two tables concerning covered compensation for 2024.

Covered Compensation Table. The IRS has updated the covered compensation table for 2024.  It provides data based on calendar years of birth beginning in 1907 and the calendar year at which individuals reach the Social Security retirement age. 

For calendar years of birth 1991 and later, and calendar years of Social Security retirement age    2058 and later, the 2024 covered compensation level is $168,600. 

Rounded Covered Compensation Table. The IRS has updated the rounded covered compensation table for 2024 based on calendar year of birth. It provides data based on calendar years of birth beginning in 1937. 

For purposes of determining rounded covered compensation for the year 1990 and later— including 2024—the rounded covered compensation is $168,600. 

Effective Date

The covered compensation tables are effective Jan. 1, 2024.

Publication

Rev. Rul. 2024-01 will be published in Internal Revenue Bulletin 2024-02, which will be issued on Jan. 8, 2024.