IRS Announces 2022 Retirement Plan Contribution Limits (401k, 403b, 457 plans)

The IRS has published the annual cost of living adjustments (IRS Notice 2021-61 ), affecting 2022 contribution limits for retirement plans and retirement-related items. The contribution limits for 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan have been increased. HR managers should inform participants of the higher 2022 limits. This is a good time for your employees to review and update their contribution amounts to take advantage of all available retirement savings opportunities.

The 2022 dollar limits for 401(k), 403(b), and 457(b) plan elective deferrals have been raised to $20,500. This is an increase of $1,000 over the 2021 limit of $19,500. Catch-up contributions for those aged 50 or older also remain the same as last year's $6,500. Defined contribution plan limits received a bump to $61,000, an increase of $2,000 above the 2021 limit.

The income limits for the Retirement Savings Contributions Credit (Saver's Credit) have been increased by between $1,000 and $2,000, depending on income level and tax filing status. The Saver's Credit can motivate lower-income employees to contribute to their retirement plan by offering a tax credit. Many employees in this category are not aware of this credit and how it may improve their retirement situation. The income limit for the Saver's Credit is $68,000 for married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married individuals filing separately, up from $33,000. Income levels to determine tax deduction eligibility for IRA and Roth IRAs have also increased. See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits for IRA and Roth IRA income threshold details.

Below is a summary table of the IRS COLA Increases for Dollar Limitations on Benefits and Contributions:

IRS 2022 COLA Benefit & Contribution Limits
401(k), 403(b), Profit-Sharing Plans, etc.	2022	2021
Annual Compensation	$305,000	$290,000
Elective Deferrals	$20,500	$19,500
Catch-up Contributions	$6,500	$6,500
Defined Contribution Limits	$61,000	$58,000
ESOP Limits	$1,230,000	$1,165,000
	$245,000	$230,000
SEP	2022	2021
SEP Minimum Compensation	$650	$650
SEP Maximum Contribution	$61,000	$58,000
SEP Maximum Compensation	$305,000	$290,000
SIMPLE Plans	2022	2021
SIMPLE Maximum Contributions	$14,000	$13,500
Catch-up Contributions	$3,000	$3,000
IRAs	2022	2021
IRA Contribution Limit	$6,000	$6,000
IRA Catch-Up Contributions	$1,000	$1,000
Traditional IRA AGI Deduction Phase-out Starting at	2022	2021
Joint Return	$109,000	$105,000
Single or Head of Household	$68,000	$66,000
Other	2022	2021
HCE Threshold	$135,000	$130,000
Defined Benefit Limits	$245,000	$230,000
Key Employee	$200,000	$185,000
457 Elective Deferrals	$20,500	$19,500
Control Employee (board member or officer)	$120,000	$115,000
Control Employee (compensation-based)	$245,000	$235,000
Taxable Wage Base	$147,000	$142,800