IRS Announces COLA Adjusted Retirement Plan Limitations for 2022

The Internal Revenue Service today released Notice 2021-61 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.

Highlights Affecting Plan Sponsors of Qualified Plans for 2022

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,500 to $20,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,500.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains is increased from $13,500 to $14,000.
  • The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $230,000 to $245,000.
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is increased for 2022 from $58,000 to $61,000.
  • The annual compensation limit under Sections 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 Section 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 Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,165,000 to $1,230,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $230,000 to $245,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $130,000 to $135,000.

The IRS previously updated Health Savings Account limits for 2021. See our post here.

The following chart summarizes various significant benefit Plan limits for 2020 through 2022:

Type of Limitation202220212020
415 Defined Benefit Plans$245,000$230,000$230,000
415 Defined Contribution Plans$61,000$58,000$57,000
Defined Contribution Elective Deferrals$20,500$19,500$19,500
Defined Contribution Catch-Up Deferrals$6,500$6,500$6,500
SIMPLE Employee Deferrals$14,000$13,500$13,500
SIMPLE Catch-Up Deferrals$3,000$3,000$3,000
Annual Compensation Limit$305,000$290,000$285,000
SEP Minimum Compensation$650$650$600
SEP Annual Compensation Limit$305,000$290,000$285,000
Highly Compensated$135,000$130,000$130,000
Key Employee (Officer)$200,000$185,000$185,000
Income Subject To Social Security Tax  (FICA)$147,000$142,800$137,700
Social Security (FICA) Tax For ER & EE (each pays)6.20%6.20%6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays)1.45%1.45%1.45%
SECA (FICA Portion) for Self-Employed12.40%12.40%12.40%
SECA (Med. HI Portion) For Self-Employed2.90%2.90%2.90%
IRA Contribution$6,000$6,000$6,000
IRA Catch-Up Contribution$1,000$1,000$1,000
HSA Max. Contributions Single/Family Coverage$3,650/ $7,300$3,600/ $7,200$3,550/ $7,100
HSA Catchup Contributions$1,000$1,000$1,000
HSA Min. Annual Deductible Single/Family$1,400/ $2,800$1,400/ $2,800$1,400/ $2,800
HSA Max. Out Of Pocket Single/Family$7,050/ $14,100$7,000/ $14,000$6,900/ $13,800

IRS Announces 2022 HSA Contribution Limits, HDHP Minimum Deductibles and HDHP Maximum Out-of-Pocket Amounts

The IRS has announced 2022 HSA and HDHP limits as follows:

Annual HSA contribution limitation. For calendar year 2022, the annual limitation on deductions for HSA contributions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,650 (up from $3,600 in 2021), and the annual limitation on deductions for HSA contributions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,300 (up from $7,200 in 2021).

High deductible health plans. For calendar year 2022, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage (unchanged from 2021), and with respect to which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage (up from $7,000 and $14,000 in 2021).

Rev. Proc 2021-25

IRS Announces COLA Adjusted Retirement Plan Limitations for 2021

The Internal Revenue Service today released Notice 2020-79 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021.

Highlights Affecting Plan Sponsors of Qualified Plans for 2021

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $19,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,500.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $13,500.
  • The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $230,000.
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is increased for 2021 from $57,000 to $58,000.
  • The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $285,000 to $290,000.
  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan remains unchanged at $185,000.
  • The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,150,000 to $1,165,000, while the dollar amount used to determine the lengthening of the five year distribution period remains unchanged at $230,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $130,000.

The IRS previously updated Health Savings Account limits for 2021. See our post here.

The following chart summarizes various significant benefit Plan limits for 2019 through 2021:

Type of Limitation202120202019
415 Defined Benefit Plans$230,000$230,000$225,000
415 Defined Contribution Plans$58,000$57,000$56,000
Defined Contribution Elective Deferrals$19,500$19,500$19,000
Defined Contribution Catch-Up Deferrals$6,500$6,500$6,000
SIMPLE Employee Deferrals$13,500$13,500$13,000
SIMPLE Catch-Up Deferrals$3,000$3,000$3,000
Annual Compensation Limit$290,000$285,000$280,000
SEP Minimum Compensation$650$600$600
SEP Annual Compensation Limit$290,000$285,000$280,000
Highly Compensated$130,000$130,000$125,000
Key Employee (Officer)$185,000$185,000$180,000
Income Subject To Social Security Tax  (FICA)$142,800$137,700$132,900
Social Security (FICA) Tax For ER & EE (each pays)6.20%6.20%6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays)1.45%1.45%1.45%
SECA (FICA Portion) for Self-Employed12.40%12.40%12.40%
SECA (Med. HI Portion) For Self-Employed2.90%2.90%2.90%
IRA Contribution$6,000$6,000$6,000
IRA Catch-Up Contribution$1,000$1,000$1,000
HSA Max. Contributions Single/Family Coverage$3,600/
$7,200
$3,550/ $7,100$3,500/ $7,00
HSA Catchup Contributions$1,000$1,000$1,000
HSA Min. Annual Deductible Single/Family$1,400/ $2,800$1,400/ $2,800$1,350/ $2,700
HSA Max. Out Of Pocket Single/Family$7,000/
$14,000
$6,900/ $13,800$6,750/ $13,500

IRS Announces 2021 HSA Contribution Limits, HDHP Minimum Deductibles and HDHP Maximum Out-of-Pocket Amounts

The IRS has announced 2021 HSA and HDHP limits as follows:

Annual HSA contribution limitation. For calendar year 2021, the annual limitation on deductions for HSA contributions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,600 (up from $3,550 in 2020), and the annual limitation on deductions for HSA contributions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,200 (up from $7,100 in 2020).

High deductible health plans. For calendar year 2021, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage (unchanged from 2020), and with respect to which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage (up from $6,900 and $13,800 in 2020).

Rev. Proc 2020-32

IRS Announces COLA Adjusted Retirement Plan Limitations for 2020

The Internal Revenue Service today released Notice 2019-59 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.

Highlights Affecting Plan Sponsors of Qualified Plans for 2020

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from  $19,000 to $19,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased from $6,000 to $6,500.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $13,000 to $13,500.
  • The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $225,000 to $230,000.
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2019 from $56,000 to $57,000.
  • The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $280,000 to $285,000.
  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $180,000 to $185,000.
  • The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,130,000 to $1,150,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $225,000 to $230,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $125,000 to $130,000.

The IRS previously Updated Health Savings Account limits for 2019. See our post here.

The following chart summarizes various significant benefit Plan limits for 2018 through 2020:

Type of Limitation202020192018
415 Defined Benefit Plans$230,000$225,000$220,000
415 Defined Contribution Plans$57,000$56,000$55,000
Defined Contribution Elective Deferrals$19,500$19,000$18,500
Defined Contribution Catch-Up Deferrals$6,500$6,000$6,000
SIMPLE Employee Deferrals$13,500$13,000$12,500
SIMPLE Catch-Up Deferrals$3,000$3,000$3,000
Annual Compensation Limit$285,000$280,000$275,000
SEP Minimum Compensation$600$600$600
SEP Annual Compensation Limit$285,000$280,000$275,000
Highly Compensated$130,000$125,000$120,000
Key Employee (Officer)$185,000$180,000$175,000
Income Subject To Social Security Tax  (FICA)$137,700$132,900$128,400
Social Security (FICA) Tax For ER & EE (each pays)6.20%6.20%6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays)1.45%1.45%1.45%
SECA (FICA Portion) for Self-Employed12.40%12.40%12.40%
SECA (Med. HI Portion) For Self-Employed2.9%2.9%2.9%
IRA Contribution$6,000$6,000$5,500
IRA Catch-Up Contribution$1,000$1,000$1,000
HSA Max. Contributions Single/Family Coverage$3,550/ $7,100$3,500/ $7,00$3,450/ $6,900
HSA Catchup Contributions$1,000$1,000$1,000
HSA Min. Annual Deductible Single/Family$1,400/ $2,800$1,350/ $2,700$1,350/ $2,700
HSA Max. Out Of Pocket Single/Family$6,900/ $13,800$6,750/ $13,500$6,650/ $13,300

IRS Announces 2020 HSA Contribution Limits, HDHP Minimum Deductibles and HDHP Maximum Out-of-Pocket Amounts

IRS has set 2020 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code

The IRS has announced 2020 HSA and HDHP limits as follows:

Annual HSA contribution limitation. For calendar year 2020, the annual limitation on deductions for HSA contributions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,550 (up from $3,500 in 2019), and the annual limitation on deductions for HSA contributions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,100 (up from $7,000 in 2019).

High deductible health plans. For calendar year 2020, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage (up from $1,350 and $2,700 in 2019), and with respect to which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,900 for self-only coverage or $13,800 for family coverage (up from $6,750 and $13,500 in 2019).

Rev. Proc. 2019-25

IRS Announces COLA Adjusted Retirement Plan Limitations for 2019

The Internal Revenue Service today released Notice 2018-83 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.

Highlights Affecting Plan Sponsors of Qualified Plans for 2019

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from  $18,500 to $19,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $220,000 to $225,000.
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2019 from $55,000 to $56,000.
  • The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $275,000 to $280,000.
  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $175,000 to $180,000.
  • The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,105,000 to $1,130,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $220,000 to $225,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $120,000 to $125,000.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,500 to $13,000.

The IRS previously Updated Health Savings Account limits for 2019. See our post here.

The following chart summarizes various significant benefit Plan limits for 2017 through 2019:

Type of Limitation 2019 2018 2017
415 Defined Benefit Plans $225,000 $220,000 $215,000
415 Defined Contribution Plans $56,000 $55,000 $54,000
Defined Contribution Elective Deferrals $19,000 $18,500 $18,000
Defined Contribution Catch-Up Deferrals $6,000 $6,000 $6,000
SIMPLE Employee Deferrals $13,000 $12,500 $12,500
SIMPLE Catch-Up Deferrals $3,000 $3,000 $3,000
Annual Compensation Limit $280,000 $275,000 $270,000
SEP Minimum Compensation $600 $600 $600
SEP Annual Compensation Limit $280,000 $275,000 $270,000
Highly Compensated $125,000 $120,000 $120,000
Key Employee (Officer) $180,000 $175,000 $175,000
Income Subject To Social Security Tax  (FICA) $132,900 $128,400 $127,200
Social Security (FICA) Tax For ER & EE (each pays) 6.20% 6.20% 6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays) 1.45% 1.45% 1.45%
SECA (FICA Portion) for Self-Employed 12.40% 12.40% 12.40%
SECA (Med. HI Portion) For Self-Employed 2.9% 2.9% 2.9%
IRA Contribution $6,000 $5,500 $5,500
IRA Catch-Up Contribution $1,000 $1,000 $1,000
HSA Max. Contributions Single/Family Coverage $3,500/ $7,000 $3,450/ $6,900 $3,400/ $6,750
HSA Catchup Contributions $1,000 $1,000 $1,000
HSA Min. Annual Deductible Single/Family $1,350/ $2,700 $1,350/ $2,700 $1,300/ $2,600
HSA Max. Out Of Pocket Single/Family $6,750/ $13,500 $6,650/ $13,300 $6,550/ $13,100

IRS Announces 2019 HSA Contribution Limits, HDHP Minimum Deductibles and HDHP Maximum Out-of-Pocket Amounts

The IRS has announced 2019 HSA and HDHP limits as follows:

Annual HSA contribution limitation. For calendar year 2019, the annual limitation on deductions for HSA contributions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,500 (up from $3,450 in 2018), and the annual limitation on deductions for HSA contributions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,000 (up from $6,900 in 2018).

High deductible health plans. For calendar year 2019, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage (unchanged from 2018), and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,750 for self-only coverage or $13,500 for family coverage (up from $6,650 and $13,300 in 2018).

Rev. Proc. 2018-30

IRS Grants Relief Raising the 2018 Annual HSA Contribution Limit for Family Coverage Back up to $6,900

On April 26, 2018 the Internal Revenue Service issued Revenue Procedure 2018-27, which provides relief for 2018 for taxpayers with family coverage under a High Deductible Health Plan (HDHP) who contribute to a Health Savings Account (HSA). For 2018, taxpayers with family coverage under an HDHP may now treat $6,900 as the maximum deductible HSA contribution.

History

The $6,900 annual limitation was originally published in 2017, in Revenue Procedure 2017-37.

In March 2018, as discussed in our prior post, the IRS reduced the maximum 2018 deductible HSA contribution for taxpayers with family coverage under an HDHP by $50, to $6,850, due to a change in the inflation adjustment calculations for 2018 under the Tax Cuts and Jobs Act.

Now, with the issuance of Revenue Procedure 2018-27, the IRS has announced this relief for affected taxpayers, which allows the $6,900 limitation to remain in effect for 2018.

IRS Revises 2018 Annual HSA Contribution Limit for Family Coverage to $6,850 (down from $6,900)

The IRS has issued Rev. Proc. 2018-18, which revises the previously-published annual limitation on deductions under Code § 223(b)(2)(B) for 2018 for an individual with family coverage under a high deductible health plan. The originally published limitation was $6,900. It has now been reduced to $6,850.

Why the Change?

The recently enacted Tax Cuts and Jobs Act requires cost of living adjustments be made using the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), which over time will reduce the cost of living adjustments made to various IRS limits.

What to Do

Employers making Health Savings Account (HSA) contributions for employees (either directly, or through their cafeteria plans) should review the elections made by their employees and adjust those elections to avoid exceeding the $6,850 limitation for 2018. Likewise, individuals making HSA contributions should revise any automatic contribution schedule they have established to avoid exceeding the limit.

The following chart summarizes various significant employee benefit Plan limits for 2016 through 2018:

Type of Limitation 2018 2017 2016
415 Defined Benefit Plans $220,000 $215,000 $210,000
415 Defined Contribution Plans $55,000 $54,000 $53,000
Defined Contribution Elective Deferrals $18,500 $18,000 $18,000
Defined Contribution Catch-Up Deferrals $6,000 $6,000 $6,000
SIMPLE Employee Deferrals $12,500 $12,500 $12,500
SIMPLE Catch-Up Deferrals $3,000 $3,000 $3,000
Annual Compensation Limit $275,000 $270,000 $265,000
SEP Minimum Compensation $600 $600 $600
SEP Annual Compensation Limit $275,000 $270,000 $265,000
Highly Compensated $120,000 $120,000 $120,000
Key Employee (Officer) $175,000 $175,000 $170,000
Income Subject To Social Security Tax  (FICA) $128,400 $127,200 $118,500
Social Security (FICA) Tax For ER & EE (each pays) 6.20% 6.20% 6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays) 1.45% 1.45% 1.45%
SECA (FICA Portion) for Self-Employed 12.40% 12.40% 12.40%
SECA (Med. HI Portion) For Self-Employed 2.9% 2.9% 2.90%
IRA Contribution $5,500 $5,500 $5,500
IRA Catch-Ip Contribution $1,000 $1,000 $1,000
HSA Max. Contributions Single/Family Coverage $3,450/ $6,850 $3,400/ $6,750 $3,350/ $6,750
HSA Catchup Contributions $1,000 $1,000 $1,000
HSA Min. Annual Deductible Single/Family $1,350/ $2,700 $1,300/ $2,600 $1,300/ $2,600
HSA Max. Out Of Pocket Single/Family $6,650/ $13,300 $6,550/ $13,100 $6,550/ $13,100