Seriously Spiked COLAs for Qualified Retirement Plans for 2023

Catherine Reese, Hillary Sizer
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Qualified retirement plans will experience unusually sharp increases to compensation and contribution limitations for 2023 compared to adjustments in recent years. On October 21, 2022, the Internal Revenue Service (IRS) released Notice 2022-55, providing the 2023 calendar year cost-of-living adjustments, also known as COLAs, for tax-qualified retirement plans. The spike is widespread, with increases to each of the statutory limits in the table below. The increases are effective January 1, 2023.

Internal Revenue Code (IRC) or Regulation Section 2023 2022
Annual compensation limit:
IRC §§ 401(a)(17) and 404(l)		 $330,000 $305,000
Elective deferral limit: IRC §§ 402(g)(1) and 457(e)(15) $22,500 $20,500
Catch-up contribution limit:
IRC § 414(v)(2)(B)(i)		 $7,500 $6,500
Defined contribution plan limit: IRC § 415(C)(1)(A) $66,000 $61,000
Defined benefit plan limit: IRC § 415(B)(1)(A) $265,000 $245,000
Highly compensated employee threshold:
IRC § 414(q)(1)(B)		 $150,000 $135,000
Key employee dollar limit in top-heavy plan:
IRC § 416(i)(1)(A)(i)		 $215,000 $200,000
Qualified longevity annuity contract premium limit:
§ 1.401(a)(9)-6		 $155,000 $145,000
SIMPLE maximum contribution limit:
IRC § 408(p)(2)(E)		 $15,500 $14,000
SIMPLE catch-up contributions limit:
IRC § 414(v)(2)(B)(ii)		 $3,500 $3,000
Simplified Employee Pension (SEP) maximum compensation: IRC § 408(k)(3)(C) $330,000 $305,000
SEP minimum compensation: IRC § 408(k)(2)(C) $750 $650
Employee Stock Ownership Plan (ESOP) limits:
IRC § 409(O)(1)(C)(ii)		 $1,330,000
$265,000		 $1,230,000
$245,000
Social Security taxable wage base $160,200 $147,000
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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.

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