Today, the IRS announced in Notice 2021-61 cost of living adjustments affecting dollar limits for pension plans and other retirement-related items for tax year 2022 under the Internal Revenue Code.
Almost all of the limits have increased this year, reflecting changes in the Consumer Price Index for All Urban Consumers (CPI-U). The notable exception for 2022 is the catch-up contribution limit under section 414 (v) of the Code for participants aged 50 and over, which remains unchanged at $ 6,500.
A comparison of the 2021 and 2022 key limits follows:
|
|
2021 |
2022 |
|
Maximum optional carry-overs to §401 (k), §403 (b) and §457 (b) plans |
$ 19,500 |
$ 20,500 * |
|
Maximum additional optional catch-up deferrals to plans other than SIMPLE plans (50 years at the end of the year) |
$ 6,500 |
$ 6,500 |
|
Limits of section 415 – Defined contribution plan Maximum annual supplement – Defined benefit plan dollar maximum |
$ 58,000 $ 230,000
|
$ 61,000 * $ 245,000 * |
|
Annual compensation limit under §§401 (a) (17), 404 (l) and 408 (k) |
$ 290,000 |
$ 305,000 * |
|
§414 (q) Definition of highly paid employee |
$ 130,000 |
$ 135,000 * |
|
§416 (i) Top Compensation – Used to identify executives as key employees |
$ 185,000 |
$ 200,000 * |
|
§409 (o) Maximum ESOP account balance subject to a 5 year distribution period |
$ 1,165,000 |
$ 1,230,000 * |
|
ESOP amount used to determine 5 year distribution period extensions |
$ 230,000 |
$ 245,000 * |
|
§408A Roth IRA maximum contribution (AGI limit) |
$ 198,000 $ 125,000 |
$ 204,000 * $ 129,000 * |
* Amount increased for 2022
Social security tax and salary base
Social security administration has previously announced that the 2022 Social Security contribution and benefit base (also known as the taxable salary base) will be $ 147,000, an increase of $ 4,200 from $ 142,800 for the 2021 calendar year. OASDI’s tax rate remains at 6.2%, which sets the maximum tax amount for 2022 at $ 9,114.00.