The IRS has announced the new retirement plan limits for 2022. A few limits stayed flat, but most increased from 2021 to 2022. Highlights include:
- The compensation limit used in determining benefits and contributions for both defined benefit and defined contribution plans is increased from $290,000 to $305,000.
- For defined benefit plans (including cash balance), the maximum annual benefit for a participant with at least ten years of participation and a normal retirement age between 62 and 65 increased from $230,000 to $245,000.
- For defined contribution plans (profit sharing and 401(k) plans), the maximum annual contribution for a participant increased from $58,000 to $61,000. While this limit includes salary deferrals, it does not include catch up contributions.
- The limit on salary deferrals for 401(k) plans increased from $19,500 to $20,500. The limit on catch up contributions for 401(k) plans, which are available to participants who attain age 50 by the end of 2021, remains unchanged at $6,500.
As 2022 approaches, now is the time to act if you want to set up a qualified plan for a 2021 calendar tax year. If you are interested in setting up a qualified plan, please contact us.
You can find a printable version of the complete list of the new 2022 annual limits by visiting the Retirement Plan Limits page of our website.