3 November 202237 minute read

IRS announces 2023 retirement and benefit plan limits, SSA announces COLA adjustment

 On October 18, 2022, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the dollar limits on benefits and contributions in retirement plans for 2023.  These adjustments are in addition to previously announced increases in limits to other employee benefit plans.  In addition, the Social Security Administration recently announced the cost-of-living adjustment to the Social Security wage base for 2023.


The updated limits for 2023, as compared to last year’s limits, are set forth in the charts below:


Qualified retirement plan contribution limits




Section 401(k) and 403(b) plan elective deferral limit
(Code Section:402(g)(1))




Catch-up contribution limit (for participants aged 50 or older)
(Code Section: 414(v)(2)(B)(i))




Defined contribution plans – annual additions limit
(Code Section: 415(c)(1)(A))




Section 457 plan elective deferral limit – deferred compensation plans of state and local governments and tax-exempt organizations
(Code Section: 457(e)(15))




Annual compensation limit
(Code Sections: 401(a)(17); 404(l); 408(k)(3)(C) and 408(k)(6)(D)(ii))




Other limits




Highly compensated employee threshold

(Code Section: 414(q)(1)(B))




Key employee compensation threshold

(Code Section: 416(i)(1)(A)(i))




Defined benefit plans - maximum annual benefit

(Code Section: 415(b)(1)(A))






SIMPLE plans








Maximum contributions
(Code Section: 408(p)(2)(E))




Catch-up contributions (for participants aged 50 or older)
(Code Section: 414(v)(2)(B)(ii))





The Social Security Administration announced the cost-of-living adjustment to the Social Security contribution and benefit base (also known as the “taxable wage base”) for 2023.               

Social Security taxable wage base



Social Security taxable wage base



Note: Federal Insurance Contributions Act (FICA) tax rates remain unchanged. The Old-Age, Survivors, and Disability Insurance (OASDI) tax of 6.20 percent each for employers and employees (12.4 percent for self-employed individuals) applies to wages up to the Social Security annual taxable wage base.  The Medicare tax of 1.45 percent each for employers and employees is not limited to the taxable wage base and applies to all wages. An additional Medicare tax of 0.9 percent for employees only applies to all wages over specified income thresholds based on filing status ($250,000 for married filing jointly, $125,000 for married filing separately; and $200,000 for all other taxpayers).


The health savings account (HSA) and HDHP limits for 2023 are as follows:

HSA/HDHP limits




Maximum health savings account


Self: $3,650

Family: $7,300


Self: $3,380

Family: $7,750


HSA catch-up contribution (for participants aged 55 or older)





HDHP minimum annual deductible

Self: $1,400

Family: $2,800

Self: $1,500

Family: $3,000


HDHP maximum out of pocket

Self: $7,050

Family: $14,100


Self: $7,500

Family: $15,000


The flexible spending account limits are as follows:

Flexible spending account limits




Health FSA


Max. carryover to following plan year: $570


Max. carryover to following plan year: $610


Dependent care FSA

Family: $5,000**

Married, filing separately: $2,500

Family: $5,000**

Married, filing separately: $2,500


**Married and filing a joint return or single parent filing

Expected benefits health reimbursement

Arrangements (EBHRAs)







Transit and parking fringe benefits limit

Transit and parking fringe benefits limit







Action items for employers

  • Update any plan documents that identify the annual limitations.
  • Update participant communications as the limits may impact important benefit elections for 2023.
  • Update Human Resource Information Systems (HRIS) and/or payroll systems with new limitations for administration, recordkeeping and tax reporting.
  • Ensure all vendor data feeds are updated to comply with the new limits.

For more information, please contact any of the members of our Employee Benefits and Executive Compensation group.