With the release of the September Consumer Price Index, the IRS has announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items. Many of the limits applicable to qualified and other employer-sponsored retirement plans, however, were statutorily set for the year by provisions included in the 2001 Economic Growth and Tax Relief Reconciliation Act (EGTRRA).
Effective January 1st
| 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|
Annual Compensation Limit: |
$330,000 | $305,000 | $290,000 | $285,000 | $280,000 | $275,000 | $270,000 |
| Limits on Defined Contribution Plan: | $66,000 | $61,000 | $58,000 | $57,000 | $56,000 | $55,000 | $54,000 |
| Limits on Defined Benefit Plan: | $265,000 | $245,000 | $230,000 | $230,000 | $225,000 | $220,000 | $215,000 |
| 401(k) 403(b) Elective Deferral Limit: | $22,500 | $20,500 | $19,500 | $19,500 | $19,000 | $18,500 | $18,000 |
| 401(k) / 403(b)/457 Catch-Up Deferral Limit: | $7,500 | $6,500 | $6,500 | $6,500 | $6,000 | $6,000 | $6,000 |
| "Highly Compensated" Employee (HCE) Limit: | $150,000 | $135,000 | $130,000 | $130,000 | $125,000 | $120,000 | $120,000 |
| "Key Employee" Officer Compensation: | $215,000 | $200,000 | $185,000 | $185,000 | $180,000 | $175,000 | $175,000 |
| Social Security Wage Base: | $160,200 | $147,000 | $142,800 | $137,700 | $132,900 | $128,400 | $127,200 |
| 457 Deferral Limits: | $22,500 | $20,500 | $19,500 | $19,500 | $19,000 | $18,500 | $18,000 |
Because many of the limits change each year, Retirement plan sponsors should immediately prepare to make systems changes to accommodate the new limits. Communication materials that specify the various plan limits should be reviewed for accuracy and revised, if necessary, before they are distributed to plan participants.
For further assistance on applying the retirement plan limits or to discuss related issues, please contact R.J.L. Pension Services, Inc.