IRS Announces Retirement Plan Limits for 2022

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:
 

2022

2021

Elective Deferral Limit (401(k) & 403(b) Plans)

$20,500

$19,500

Catch Up Contributions (Age 50 and over)

$6,500

$6,500

Annual Defined Contribution Limit

$61,000

$58,000

Annual Compensation Limit

$305,000

$290,000

Highly Compensated Employee Threshold

$135,000

$130,000

Key Employee Compensation

$200,000

$185,000

Social Security Wage Base

$147,000

$142,800

 

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.
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