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Qualified Plans Cost-of-Living Adjusted Limits for 2022

Posted by Robert K. Butterfield | Nov 08, 2021 | 0 Comments

Contributing Author: Kristine Custodio Suero, Advanced Certified Paralegal

The Internal Revenue Service announced cost-of-living adjusted limits for 2022. The limits have increased! Here are some of the adjustments:

  • Effective January 1, 2022, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $230,000 to $245,000.
  • The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2022 from $58,000 to $61,000.
  • The limitation under § 402(g)(1) on the exclusion for 401(k) plan elective deferrals described in § 402(g)(3) is increased from $19,500 to $20,500.
  • The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $290,000 to $305,000.
  • The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $185,000 to $200,000.
  • The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,165,000 to $1,123,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $230,000 to $245,000.
  • The limitation used in the definition of “highly compensated employee” under § 414(q)(1)(B) is increased from $130,000 to $135,000 (applies to the following year).
  • The dollar limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over remains unchanged at $6,500. The dollar limitation under section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over remains unchanged at $3,000.

 Click here to download the entire IRS Notice 2021-61.

About the Author

Robert K. Butterfield

Robert Butterfield's practice emphasis is on employee benefits, executive compensation, ERISA, estate planning and corporate planning.

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