Member Article

On October 21, 2022, the IRS announced in Notice 2022-55 cost-of-living adjustments to the tax-qualified retirement plan dollar limits for 2023. Most of the applicable dollar limits currently effective for 2022 will increase substantially compared with prior years. Below is a summary of the limits that are generally relevant for most retirement plans.

Effective January 1, 2023:

• The elective deferral limit for 401(k), 403(b), and eligible 457(b) plans is increased from $20,500 to $22,500.
• The catch-up contribution limit for those aged 50 or older is increased from $6,500 to $7,500.
• The dollar limit on the annual benefit under a defined benefit plan is increased from $245,000 to $265,000.
• The dollar limit on annual allocations under a defined contribution plan is increased from $61,000 to $66,000.
• The annual compensation limit is increased from $305,000 to $330,000.
• The annual compensation limit for eligible participants in certain governmental plans that, as of July 1, 1993, allowed for the cost-of-living adjustments to the annual compensation limit in effect at that time is increased from $450,000 to $490,000.
• The dollar threshold for "highly compensated employee" status used in performing various nondiscrimination tests is increased from $135,000 to $150,000.
• The dollar threshold for "key employee" status for officers used in performing the "top-heavy" test is increased from $200,000 to $215,000.

The Social Security Administration recently announced the Social Security Wage Base for 2023 will increase from $147,000 to $160,200.

If you have questions, please reach out to your contact in the Hanson Bridgett Employee Benefits Group.