The Vita Blog November 2021

The Internal Revenue Service has announced the 2022 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans. The Social Security Administration (SSA) has also announced the taxable wage base for 2022:
 

Definitions 

• Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).
   
• Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits, if permitted by the company’s retirement plan.
    
• Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation, and is applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account.
   
• Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and non-discrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).
   
• Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).
   
• Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.

Health FSA

The annual Health FSA limit will increase $100 from $2,750 in 2021 to $2,850 in 2022.

FSA Balance Rollovers

The increase of the Health FSA limit means an increase to the Health FSA rollover amount allowed for 2022. Up to $570 (20% of the regular election maximum) will be rolled from the 2022 plan year into the 2023 plan year.

Commuter Benefits Limits

Adoption Assistance Limit