IRS Releases 2022 Cost-of Living Adjusted Limits for Benefit Plans
Recently, the Internal Revenue Service announced 2022 dollar limits for qualified retirement plans, including 401(k) plans, deferred compensation plans, and health and welfare plans. Adjustments to certain limits are based on a cost-of-living index.
In addition, the Social Security taxable wage base, which affects qualified retirement plans "integrated" with Social Security, typically adjusts each year. For 2022, the taxable wage base increases to $147,000.
As with other years, some, but not all, limits increased for 2022. The limits selectively increased for 2022 are highlighted in red below.
| 2022 Limit | 2021 Limit | |
| Annual Limit on 401(k)/403(b) Deferral Contributions | $20,500 | $19,500 |
| Annual Limit on Age 50 and Older 401(k)/403(b) Catch-up Contributions | $6,500 | $6,500 |
| Annual Compensation Limit | $305,000 | $290,000 |
| Annual Contribution Limit for Defined Contribution Plans | $61,000 | $58,000 |
| Annual Benefit Limit for Defined Benefit Plans | $245,000 | $230,000 |
| Prior Year Compensation Amount for Determining Highly Compensated Employees | $135,000 | $130,000 |
| Key Employee Compensation Limit | $200,000 | $185,000 |
| Annual Limit on SIMPLE Contributions | $14,000 | $13,500 |
| Annual Limit on Catch-up Contributions to SIMPLE Plans | $3,000 | $3,000 |
| ESOP Account Balance Limit Subject to 5-Year Distribution Period | $1,230,000 | $1,165,000 |
| Incremental Amount Adding Additional Year(s) to ESOP 5-Year Distribution Period | $245,000 | $230,000 |
| Earnings Threshold for SEP Contribution | $650 | $650 |
Deferred Compensation Limits
| 2022 Limit | 2021 Limit | |
| Annual Limit on 457(b) Contributions | $20,500 | $19,500 |
| Annual Limit on Catch-up Contributions to 457(b) Plans | $6,500 | $6,500 |
| 409A Specified Employee Compensation Threshold | $200,000 | $185,000 |
| 409A Involuntary Separation Pay Limit | $610,000 | $580,000 |
Health and Welfare Plan Limits
| 2022 Limit | 2021 Limit | |
| Annual Limit on Salary Reduction Contributions to Health FSA | $2,850 | $2,750 |
| Annual Limit on Health FSA Carryover | $570 | Unlimited* |
| Annual Limit on Salary Reduction Contributions to Dependent Care FSA |
$5,000 if married filing jointly or if single $2,500 if married filing separately |
$10,500 if married filing jointly or if single† $5,250 if married filing separately† |
| Annual Limit on HSA Contributions | $3,650 (EE only) $7,300 (family) |
$3,600 (EE only) $7,200 (family) |
| Annual Limit on Catch-up Contributions to HSA |
$1,000 | $1,000 |
| Annual Minimum Deductible for High Deductible Health Plans | $1,400 (EE only) $2,800 (family) |
$1,400 (EE only) $2,800 (family) |
| Annual Limit on High Deductible Health Plan Out-of-pocket Expenses |
$7,050 (EE only) $14,100 (family) |
$7,000 (EE only) $14,000 (family) |
If you have a question about any of these limits and how they apply, or any other employee benefits concerns, please reach out to one of the Davis Wright Tremaine benefits attorneys.
* The Consolidated Appropriations Act permitted a plan sponsor to allow unlimited carryovers of health FSA contributions from 2021 to 2022 rather than the standard $550 carryover limit for 2021.
† The American Rescue Plan Act permitted a plan sponsor to adopt higher limits on contributions to a dependent care FSA for 2021 rather than the standard $5,000/$2,500 limits.