Annual Limits on Qualified Plans for 2022

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On November 4, 2021, the Internal Revenue Service (IRS) released Notice 2021-61, which sets forth the 2022 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans.  The health savings account (HSA) and high deductible health plan (HDHP) annual deductible and out-of-pocket expense adjustments were announced earlier this year in Revenue Procedure 2021-25.  In addition, the Social Security Administration announced its cost-of-living adjustments for 2022 on October 13, 2021, which includes a change to the taxable wage base.

The IRS previously issued guidance on temporary COVID-19 relief for cafeteria plans provided in the Consolidated Appropriations Act.  Among other things, these temporary rules allow employers to amend their cafeteria plans to permit all unused balances at the end of the 2021 plan year in health or dependent care FSAs to be used for expenses in 2022.  For more information about these temporary rules, see Stinson’s previous blog: IRS Guidance on Coronavirus Relief for FSAs, DCAPs, and Cafeteria Plans: Almost Anything Goes.

The following chart summarizes the 2022 limits for benefit plans. The 2021 limits are provided for reference.

  2021 2022
Elective Deferral Limit 401(k), 403(b), 457(b) $19,500 $20,500
Catch-up Limit (age 50+) $6,500 $6,500
(no change)
Defined Benefit Limit $230,000 $245,000
Defined Contribution Limit $58,000 $61,000
Dollar Limit – Highly Compensated Employees $130,000 $135,000
Officer – Key Employee $185,000 $200,000
Annual Compensation Limit $290,000 $305,000
SEP Eligibility Compensation Limit $650 $650 (no change)
SIMPLE Deferral Limit $13,500 $14,000
SIMPLE Catch-up Limit (age 50+) $3,000 $3,000

(no change)

Social Security Taxable Wage Base $142,800 $147,000
ESOP 5 Year Distribution Extension Account Minimum $1,165,000 $1,230,000
Additional Amount for 1-Year Extension $230,000 $245,000
HSA (Self/Family) Maximum Annual Contribution $3,600/$7,200 $3,650/$7,300
HDHP Minimum Deductible Limits $1,400/$2,800 $1,400/$2,800

(no change)

Out-of-pocket Expense Annual Maximum $7,000/$14,000 $7,050/$14,100
Medical FSA $2,750 *

*Waiting for final 2022 number from the IRS.

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.

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