The Internal Revenue Service announced cost-of-living adjustments affecting certain dollar limitations for pension plans and other retirement-related limitations for 2022 in Notice 2021-61.
The following chart details 2022 retirement plan dollar limitation cost-of-living adjustments:
| Limitation Description | 2021 | 2022 |
| Maximum annual benefit under a defined benefit plan under IRC Section 415(b)(1)(A) | $230,000 | $245,000 |
| Maximum annual contribution to an individual’s defined contribution plan account under IRC Section 415(c) | $58,000
(plus catch-up) |
$61,000
(plus catch-up) |
| Elective contribution limit under IRC Section 402(g)(1) (for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan) | $19,500 | $20,500 |
| Maximum amount of annual compensation that may be taken into account for determining benefits or contributions to retirement plans under IRC Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) | $290,000 | $305,000 |
| Dollar amount for determining maximum account balance in an employee stock ownership plan subject to a 5-year distribution period under IRC Section 409(o)(1)(C)(ii) | $1,165,000 | $1,230,000 |
| Dollar amount used for determining the lengthening of the 5-year distribution period in an employee stock ownership plan under IRC Section 409(o)(1)(C)(ii) | $230,000 | $245,000 |
| Amount of compensation to be a “key” employee under a “top-heavy” plan under IRC Section 416(i)(1)(A)(i) | $185,000 | $200,000 |
| Dollar limitation used in the definition of “highly compensated employee” under IRC Section 414(q)(1)(B) | $130,000 | $135,000 |
| Limitation under IRC Section 408(p)(2)(E) for salary deferral contributions to SIMPLE retirement accounts | $13,500 | $14,000 |
| Limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan under IRC Section 664(g)(7) | $50,000 | $55,000 |
| Wage Base For Social Security Tax | $142,800 | $147,000* |
*October, 13, 2021 SSA announcement
The following limits remain unadjusted for 2022:
- The catch-up contribution limit for employees who are age 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,500.
- The minimum compensation amount under IRC Section 408(k)(2)(C) for simplified employee pensions (SEPs) remains unchanged at $650.
- The limit on annual contributions to an IRA remains unchanged at $6,000.
- The additional catch-up contribution limit to an IRA for individuals age 50 and over remains $1,000.
Please click here for more details on the changes made by IRS Notice 2021-61.