<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=187647285171376&amp;ev=PageView&amp;noscript=1">

Plan Limits Updated for 2022 by the IRS

Published by Kim Moore on Nov 15, 2021 6:00:00 AM

Each year the Internal Revenue Service reviews the limitations for benefit plan contributions and other supporting factors based on inflationary increases and other factors. Here are several limits have been updated for 2022:

  • For individual 401(k) participants, the maximum amount that can be contributed (pre-tax or after-tax Roth) to 401(k) plans has401k Contribution Increased been increased to $20,500. This is an increase from $19,500 that was applicable for 2021 and 2020. See below for the catch-up contribution limits. The total annual contribution to a 401(k) Plan increased from $58,000 to $61,000 when including all contribution types.

  • The catch-up amount contribution limit remains unchanged at $6,500, for participants aged 50 and older.

  • The limit on compensation that can be included for benefit purposes was increased from $290,000 to $305,000.

  • The annual amount used to determine a highly compensation employee for discrimination testing purposes was raised from $130,000 to $135,000.

  • The dollar amount limitation concerning the definition of a “key employee’ in a top-heavy plan was raised from $185,000 to $200,000.

Plan Sponsors should ensure those responsible for benefit administration within their companies are aware of these changes and the payroll and benefit systems are updated accordingly. For more information on this subject and to see additional benefit plan limit adjustments for other plan types, visit the IRS website at https://www.irs.gov/pub/irs-drop/n-21-61.pdf

New Call-to-action

Retirement plans can be very complex. As an innovative firm Summit CPA specializes in 401(k) audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. For assistance contact our office at (866) 497-9761 to schedule an appointment.

Leave a comment