2022 retirement and benefit plan limits explained in 5 short charts
On November 4, 2021, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the dollar limits on benefits and contributions in retirement plans for 2022.
In addition, the Social Security Administration recently announced the cost-of-living adjustment to the Social Security wage base for 2022.
Furthermore, in Spring 2021 the IRS announced the annual contribution limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2022.
Many of the limits will increase in 2022.
The updated limits for 2022, as compared to the 2021 limits, are set forth in the charts below.|
Qualified retirement plan contribution limits |
2021 |
2022 |
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Elective deferral limit |
$19,500 |
$20,500 |
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Catch-up contribution limit (for participants age 50 or older) |
$6,500 |
$6,500 |
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Defined contribution plans – annual contribution limit |
$58,000 |
$61,000 |
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Section 457 plan elective deferral limit—deferred compensation plans of state and local governments and tax exempt organizations |
$19,500 |
$20,500 |
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Annual compensation limit |
$290,000 |
$305,000 |
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Other limits |
2021 |
2022 |
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Highly compensated employee threshold (Code Section: 414(q)(1)(B)) |
$130,000 |
$135,000 |
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Key employee compensation threshold (Code Section: 416(i)(1)(A)(i)) |
$185,000 |
$200,000 |
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Defined benefit plans - maximum annual benefit (Code Section: 415(b)(1)(A)) |
$230,000 |
$245,000 |
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SIMPLE plans |
2021 |
2022 |
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Maximum contributions |
$13,500 |
$14,000 |
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Catch-up contributions (for participants age 50 or older) |
$3,000 |
$3,000 |
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On October 13, 2021, the Social Security Administration announced the cost-of-living adjustment to the Social Security taxable wage base for 2022.
|
Social Security taxable wage base |
2021 |
2022 |
|
Social Security taxable wage base |
$142,800 |
$147,000 |
On May 10, 2021, the IRS provided certain inflation-adjusted amounts for HSAs and HDHPs for 2022. It is expected that the IRS will announce additional health and welfare plan limits in the near future.
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HSA/HDHP limits |
2021 |
2022 |
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Maximum health savings account (HSA) contribution |
Self: $3,600 Family: $7,200 |
Self: $3,650 Family: $7,300 |
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HSA catch-up contribution (for participants age 55 or older) (Not changed) |
$1,000 |
$1,000 |
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HDHP minimum annual deductible (Not changed) |
Self: $1,400 Family: $2,800 |
Self: $1,400 Family: $2,800 |
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Maximum out-of-pocket amount for HDHP |
Self: $7,000 Family: $14,000 |
Self: $7,050 Family: $14,100 |
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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 2022.
- 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.
Sherry Klenk is a consultant with DLA Piper’s Employee Benefits and Executive Compensation group, based in Chicago. Reach her at sherry.klenk@dlapiper.com.
