The below presents the Internal Revenue Service (IRS) recently announced 2022 cost-of-living adjustments for retirement, health and welfare plans, and transportation programs. Many of the retirement plan limits changed for 2022 due to recent inflation. Notable increases include the defined contribution and defined benefit plan limitations. Other notable increases in 2022 are the compensation-related limits and elective deferral amounts.
Retirement Plan Limits
The 2022 annual retirement plan limitations as compared to 2021 are as follows:
| 2022 | 2021 | |
|---|---|---|
| 401(k), 403(b) and 457(b) Plan Elective Deferrals | $20,500 | $19,500 |
| Age 50 Catch-Up Contribution (For Above Plans) | $6,500 | $6,500 |
| SIMPLE Plan Elective Deferrals | $14,000 | $13,500 |
| SIMPLE Plan Age 50 Catch-Up Contribution | $3,000 | $3,000 |
| IRA Contribution Limit (Traditional and Roth) | $6,000 | $6,000 |
| IRA Age 50 Catch-Up Contribution (Not Indexed) | $1,000 | $1,000 |
| Defined Contribution Plan Limit | $61,000 | $58,000 |
| Defined Benefit Plan Limit | $245,000 | $230,000 |
| Annual Compensation Limit | $305,000 | $290,000 |
| Highly Compensated Employee | $135,000 | $130,000 |
| Key Employee | $200,000 | $185,000 |
| FICA Taxable Wage Base | $147,000 | $142,800 |
Health and Welfare Plan Limits
The 2022 annual limitations as compared to 2021 are as follows:
| 2022 | 2021 | |
|---|---|---|
| Flexible Spending Accounts (FSA) | $2,850 | $2,750 |
| Dependent Care FSA (Not Indexed) | $5,000 | $5,000 |
| Health Savings Account (HSA) Age 55 Catch-Up Contribution (Not Indexed) | $1,000 | $1,000 |
| Self-Only Coverage: | ||
| HSA Contribution | $3,650 | $3,600 |
| Minimum Deductible for High Deductible Health Plan (HDHP) | $1,400 | $1,400 |
| Maximum Out-Of-Pocket (OOP) Expense Limit for HDHP | $7,050 | $7,000 |
| Family Coverage: | ||
| HSA Contribution | $7,300 | $7,200 |
| Minimum Deductible for HDHP | $2,800 | $2,800 |
| Maximum OOP Expense Limit for HDHP | $14,100 | $14,000 |
Qualified Transportation Fringe Benefit Limits
The 2022 monthly qualified transportation fringe benefit limitations as compared to 2021 are as follows:
| 2022 | 2021 | |
|---|---|---|
| Parking and Transit | $280 | $270 |
| Bicycle | $20 | $20 |
Plan sponsors should update payroll and plan administration systems for the 2022 cost-of-living adjustments and incorporate the new limits in relevant employee and participant communications.
For further information about the new IRS employee plan limits, contact your ORBA advisor or 312.670.7444. Visit orba.com to learn more.
