Employee Benefits & Executive Compensation November 5, 2021 (No. 1)
The Internal Revenue Service (“IRS”) announced yesterday (November 4, 2021) the following dollar limits applicable to tax-qualified plans for 2022:
- The limit on the maximum amount of elective contributions that a person may make to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan increased from $19,500 to $20,500.
- The limit on “catch-up contributions” to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan for persons age 50 and older is unchanged at $6,500.
- The dollar limit on the maximum permissible allocation under a defined contribution plan is increased from $58,000 to $61,000.
- The maximum annual benefit under a defined benefit plan is increased from $230,000 to $245,000.
- The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will go from $290,000 to $305,000.
- The dollar amount used to identify “highly compensated employees” is increased from $130,000 to $135,000.
Additional information regarding benefit plan dollar limits can be obtained in IRS Notice 2021-61.