IRS Benefit Plan Limits for 2022
On November 4, 2021, the Internal Revenue Service released Notice 2021-61, announcing cost-of-living
adjustments that affect contribution limits for retirement plans and retirement accounts in 2022. The list
below, though not exhaustive, highlights key changes that retirement plan sponsors should be aware of,
as well as several limitations that remain unchanged from 2020:
• The elective deferral limit is increasing from $19,500 to $20,500.
• The catch-up contribution limit for employees ages 50 and older remains unchanged at $6,500.
• The aggregate contribution limit for defined contribution plans is increasing from $58,000 to
$61,000.
• The annual compensation limit used to calculate contributions is increasing from $290,000 to
$305,000.
• The limitation on the annual benefit under a defined benefit is increasing from $230,000 to
$245,000. (For a participant who separated from service before January 1, 2022, the limitation for
defined benefit plans under Section 415(b)(1)(B) can be computed by multiplying the participant’s
compensation limitation, as adjusted through 2021, by 1.0534.)
• The dollar limit used in the definition of “key employee” in a top-heavy retirement plan is
increasing from $185,000 to $200,000.
• The dollar limit used in the definition of “highly compensated employee” is increasing from
$130,000 to $135,000.
The table below displays 2021 and 2022 limits for a host of tax breaks:
| 401(k) Plan Limits for Plan Year | 2021 Limit | 2022 Limit |
| 401(k) elective deferral limit1 | $19,500 | $20,500 |
| Catch-up contribution2 | $6,500 | $6,500 |
| Defined contribution dollar limit | $58,000 | $61,000 |
| Compensation limit3 | $290,000 | $305,000 |
| Highly compensated employee income limit | $130,000 | $135,000 |
| Key employee officer limit | $185,000 | $200,000 |
| Non-401(k) Limits | ||
| 403(b) elective deferral limit1 | $19,500 | $20,500 |
| Defined benefit dollar limit | $230,000 | $245,000 |
| 457 employee deferral limit | $19,500 | $20,500 |
1 Employee deferrals to all 401(k) and 403(b) plans must be aggregated for purposes of this limit.
2 Contributors must be age 50 or older during the calendar year.
3 All compensation from a single employer (including all members of a controlled group) must be aggregated for purposes of this limit.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax preparer, professional tax advisor, and/or a lawyer.
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