New Retirement Plan Limitations Announced by the IRS for 2023
On October 24, 2022, the IRS released IRS Notice 2022-55, providing for the new cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2023 Tax Year. Changes to the limits are based upon the Social Security cost-of-living increases. As there was a significant increase in the cost-of-living during the past twelve months, the applicable pension and retirement limitations have risen dramatically from the rates that have been in place for the 2022 Tax Year. The new rates will significantly increase the amounts that can be contributed for employees and by employees to retirement plans for the 2023 Tax Year.
Below are the new 2023 plan limitations:
2023 Retirement Plan Limits
|
|
2023 |
2022 |
2021 |
|
401(k),403(b) and 457(b) Deferral Limits |
$22,500 |
$20,500 |
$19,500 |
|
401(k) and 403(b) Catch-up Deferral Limits |
$7,500 |
$6,500 |
$6,500 |
|
Annual Limitation on Compensation |
$330,000 |
$305,000 |
$290,000 |
|
Defined Contribution Limitation |
$66,000 |
$61,000 |
$58,000 |
|
Defined Benefit Limitation |
$265,000 |
$245,000 |
$230,000 |
|
Highly Compensated Employee Compensation Threshold |
$150,000 |
$135,000 |
$130,000 |
|
Key Employee Compensation - Officer Threshold |
$215,000 |
$200,000 |
$185,000 |
|
SIMPLE Deduction |
$15,500 |
$14,000 |
$13,500 |
|
SIMPLE Catch-Up Contribution |
$3,500 |
$3,000 |
$3,000 |
|
IRA Contribution Limit |
$6,500 |
$6,000 |
$6,000 |
|
IRA Catch-Up Contribution Limit |
$1,000 |
$1,000 |
$1,000 |
|
Social Security Wage Base |
$160,200 |
$147,000 |
$142,800 |
Benefit programs should be a win-win for employers and employees. We strive to accomplish that goal in the design, implementation and operation of sophisticated benefit and executive compensation programs – qualified and non-qualified retirement programs and health and welfare plans. Our employee benefits team has a long track record of working to maximize the efficiency and economic feasibility of each program.
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