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IRS Announces 2023 Cost-of-Living Adjustments Affecting Retirement Plans

by | Oct 21, 2022 |

By Ari Sonneberg

The Internal Revenue Service announced cost-of-living adjustments affecting certain dollar limitations for pension plans and other retirement-related limitations for 2023 in Notice 2022-55.

The following chart details 2023 retirement plan dollar limitation cost-of-living adjustments:

Limitation Description 2022 2023
Maximum annual benefit under a defined benefit plan under IRC Section 415(b)(1)(A) $245,000 $265,000
Maximum annual contribution to an individual’s defined contribution plan account under IRC Section 415(c) $61,000

(plus catch-up)


(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) $20,500 $22,500
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) $305,000 $330,000
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) $1,230,000 $1,330,000
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) $245,000 $265,000
Amount of compensation to be a “key” employee under a “top-heavy” plan under IRC Section 416(i)(1)(A)(i) $200,000 $215,000
Dollar limitation used in the definition of “highly compensated employee” under IRC Section 414(q)(1)(B) $135,000 $150,000
Limitation under IRC Section 408(p)(2)(E) for salary deferral contributions to SIMPLE retirement accounts $14,000 $15,500
Limitation concerning the qualified gratuitous transfer of qualified employer securities to an employee stock ownership plan under IRC Section 664(g)(7) $55,000 $60,000
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 $6,500 $7,500
Minimum compensation amount under IRC Section 408(k)(2)(C) for simplified employee pensions (SEPs) $650 $750
IRA contribution limit $6,000 $6,500
Wage Base For Social Security Tax $147,000 $160,200*

*October, 13, 2022 SSA announcement

Note: 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 2022-55.