November 29, 2023

2023 End of Year Plan Sponsor “To Do” List (Part 2) Annual Cost of Living Adjustments

Allison Bans, Nancy Campbell, Matthew Chiarello, Amberlee Conley, Greg Gautam, Sara Van Houten, Anne Meyer

Snell & Wilmer

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As is tradition, we are happy to present our End of Year Plan Sponsor “To Do” Lists. We are publishing our “To Do” Lists in four separate Employee Benefits Updates. Part 1 covered year-end health and welfare plan issues. This Part 2 describes annual cost-of-living increases and includes a summary table of penalties, percentages, and premiums under the employer shared responsibility requirements of Code Section 4980H. Parts 3 and 4 will cover qualified plan and executive compensation issues. Each Employee Benefits Update provides a “To Do” List of items to consider taking action on before the end of 2023 or in early 2024.

As always, we appreciate your relationship with Snell & Wilmer and hope that these “To Do” Lists can help focus your efforts over the next few months.

Part 2 - Annual Cost of Living Adjustments “To Do” List

Qualified Retirement Plan Dollar Limits	2022	2023	2024
Limit on Section 401(k) Deferrals Section 402(g)	$20,500	$22,500	$23,000
Limit on Catch-up Contributions Section 414(v)(2)(B)(i)	$6,500	$7,500	$7,500
Limit on Deferrals for Government and Tax-Exempt Organization Deferred Compensation Plans Section 457(e)(15)	$20,500	$22,500	$23,000
Annual Benefit Limit for Defined Benefit Plans Section 415(b)(1)(A)	$245,000	$265,000	$275,000
Limit on Annual Contributions to Defined Contribution Plans Section 415(c)(1)(A)	$61,000	$66,000	$69,000
Limit on Compensation Considered by Qualified Retirement Plans Section 401(a)(17)	$305,000	$330,000	$345,000
Dollar Amount for the Definition of Highly Compensated Employee Section 414(q)(1)(B)	$135,000	$150,000	$155,000
Dollar Amount for the Definition of a Key Employee in a Top-Heavy Plan Section 416(i)(1)(A)(i)	$200,000	$215,000	$220,000
Dollar Amount for Determining the Maximum Account Balance in an ESOP Subject to Five-Year Distribution Period Section 409(o)(1)(C)(ii)	$1,230,000	$1,330,000	$1,380,000
SIMPLE Retirement Account Limitation Section 408(p)(2)(E)	$14,000	$15,500	$16,000
Social Security Taxable Wage11 Base	$147,000	$160,200	$168,600

Health & Welfare Plan Dollar Limits	2022	2023	2024
Annual Cost Sharing Limit (self-only)	$8,700	$9,100	$9,450
Annual Cost Sharing Limit (other than self-only)	$17,400	$18,200	$18,900
HDHP Out-of-Pocket Maximum (self-only)	$7,050	$7,500	$8,050
HDHP Out-of-Pocket Maximum (family)	$14,100	$15,000	$16,100
Annual HDHP Deductible (self-only)	Not less than $1,400	Not less than $1,500	Not less than $1,600
Annual HDHP Deductible (family)	Not less than $2,800	Not less than $3,000	Not less than $3,200
Maximum Annual HSA Contributions (self-only)	$3,650	$3,850	$4,150
Maximum Annual HSA Contributions (family)	$7,300	$7,750	$8,300
Maximum HSA Catch-Up Contribution	$1,000	$1,000	$1,000
Health Flexible Spending Account Maximum	$2,850	$3,050	$3,200

Code Section 4980H Amounts	2021	2022	2023	2024
Code Section 4980H(a) Penalty (95% Test)	$2,700 annual / $225 monthly	$2,750 annual / $229.17 monthly	$2,880 annual / $240 monthly	$2,970 annual / $247.50 monthly
Code Section 4980H(b) Penalty (Affordability)	$4,060 annual / $338.34 monthly	$4,120 annual / $343.34 monthly	$4,320 annual / $360 monthly	$4,460 annual / $371.67 monthly
Affordability Safe Harbor Percentage	9.83%	9.61%	9.12%	8.39%
Federal Poverty Level for 48 Contiguous United States	$12,880	$13,590	$14,580	To be announced in Early 2024
Allowable Monthly Premium for Calendar Year Plans (Federal Poverty Level)	$12,760 x .0983/12 = $104.52 or $12,880 x .0983/12 = $105.50	$12,880 x .0961/12 = $103.14 or $13,590 x .0961/12 = $108.83	$13,590 x .0912/12 = $103.28 or $14,580 x .0912/12 =$110.81	$14,580 x .0839/12 = $101.94 or $__ x .0839/12 =*

* Pending Updated Federal Poverty Level

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.