IRS Announces Cost-of-Living Adjustments Affecting Retirement Plans for 2022

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)
Maximum annual contribution to an individual's defined contribution plan account under IRC Section 415(c)
(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)
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)
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)


Amount of compensation to be a "key" employee under a "top-heavy" plan under IRC Section 416(i)(1)(A)(i)


Dollar limitation used in the definition of "highly compensated employee" under IRC Section 414(q)(1)(B)

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)


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.