IRS Announces Increased Benefit Limits for 2022

IRS Announces Increased Benefit Limits for 2022 December 8, 2021

IRS Announces Increased Benefit Limits for 2022

December 8, 2021

The Internal Revenue Service has announced annual cost-of-living increases to benefit and contribution limits for 2022. These limits, which are described in Notice 2021-61, affect defined benefit pension plans, 401(k) and other defined contribution plans, 403(b) plans and most governmental plans. The IRS also recently issued Revenue Procedure 2021-45, announcing an increase in the maximum amount of contributions to a flexible spending account for 2022.

Notably, the limit on pre-tax elective deferrals to a 401(k), 403(b) or 457(b) plan will increase from $19,500 to $20,500 for 2022; the compensation limit under Code Section 401(a)(17) will increase from $290,000 to $305,000; and the overall limit on annual additions to a defined contribution plan will increase from $58,000 to $61,000. The annual limit on catch-up contributions to a 401(k) plan by participants age 50 or older will remain at $6,500 for 2022. These 2022 Code limits, along with others, are summarized in the chart below.

Benefit Limit Elective Deferrals to 401(k)/403(b)/457(b) Plan Age 50+ Catch-Up Contributions Defined Benefit Pension Defined Contribution Contributions Compensation Highly Compensated Employee Threshold Key Employee/Officer

2022 $20,500 $6,500 $245,000 $61,000 $305,000 $135,000 $200,000

2021 $19,500 $6,500 $230,000 $58,000 $290,000 $130,000 $185,000

In addition to the retirement plan limits above, the IRS also increased the maximum amount an employee may contribute to a flexible spending account offered as part of a cafeteria plan, from $2,750 to $2,850 for the 2022 plan year. For plans that permit a carryover of unused amounts to the next plan year, the carryover amount for 2022 is $570.

Copyright ? 2021, Slevin & Hart, P.C. All Rights Reserved.

IRS Announces Increased Benefit Limits for 2022 December 8, 2021

Please contact Slevin & Hart if you have questions on how the updated benefit limits may affect your plan.

Attorneys

Tara D. Roslin

Timothy K. Eicher

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SLEVIN & HART, P.C.: Focusing Exclusively on Employee Benefits Washington, DC | New York, NY (202) 797-8700 | Copyright ? 2021, Slevin & Hart, P.C. All Rights Reserved.

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