2022 Annual Limits Announced

The IRS recently released inflation-adjusted limitations that apply to various employee benefits in 2022.

Social Security Taxable Wage Base for 2022

The Social Security Administration recently announced that the maximum amount of earnings subject to Social Security tax will increase from $142,800 in 2021 to $147,000 in 2022.

Retirement Plan Dollar Limitations for 2022

The Internal Revenue Service recently announced the dollar limits that apply to retirement plans during 2022.  Here are some of the more important limits:

Elective Deferral Limit for 401(k), 403(b) and 457 Plans

• 2021 Limit:  $19,500
• 2022 Limit:  $20,500

Catch-Up Contribution Limit for 401(k), 403(b) and 457 Plans

• 2021 Limit:  $6,500
• 2022 Limit:  $6,500 (unchanged)

Maximum Compensation Limit for Qualified Retirement Plans

• 2021 Limit:  $290,000
• 2022 Limit:  $305,000

Annual Additions Limit for Defined Contribution Plans

• 2021 Limit:  $58,000
• 2022 Limit:  $61,000

Annual Benefit Limit for Defined Benefit Plans

• 2021 Limit:  $230,000
• 2022 Limit:  $245,000

Annual Compensation for Classification of Highly Compensated Employees

• 2021 Amount:  $130,000
• 2022 Amount:  $135,000

Note:  An employee is a highly compensated employee (HCE) based upon the employee’s compensation during the prior plan year.  Therefore, in determining whether an employee is an HCE for a plan year beginning during 2022, the participant’s compensation during the 2021 plan year and the compensation limit for the 2021 plan year are used.

Annual Compensation for Classification of a Key Employee

• 2021 Limit:  $185,000
• 2022 Limit:  $200,000

HSA Dollar Limitations for 2022

The IRS also recently announced increases in the dollar limits that apply to HSAs in 2022:

Annual HSA Contribution Limit

• 2021 Limit:  $3,600 for self-only ($7,200 for family) HDHP coverage
• 2022 Limit:  $3,650 for self-only ($7,300 for family) HDHP coverage

HSA Catch-Up Contribution Limit (for individuals age 55 or older)

• 2021 Limit:  $1,000
• 2022 Limit:  $1,000 (unchanged)

Minimum Annual HDHP Deductible

• 2021 Limit:  $1,400 for self-only ($2,800 for family) HDHP coverage
• 2022 Limit:  $1,400 for self-only ($2,800 for family) HDHP coverage (unchanged)

Maximum HDHP Out-of-Pocket Expense Limit

• 2021 Limit:  $7,000 for self-only ($14,000 for family) HDHP coverage
• 2022 Limit:  $7,050 for self-only ($14,100 for family) HDHP coverage

Medical FSA Limitation and Maximum Carryover Amount for 2022

As of the date this client alert was published, the IRS has not released the revised dollar limitation on employee salary reduction contributions to a medical FSA, or the revised maximum medical FSA carryover amount.  For 2021, the employee salary reduction contribution dollar limitation was $2,750.  For 2022, we project this limitation will be $2,850.  Additionally, for 2021, the maximum carryover amount was $550.  For 2022, we project the maximum carryover amount will be $570.

For more information on the above, or if you have any questions, please contact the authors or any member of the Employee Benefits practice group.