Benefit Insights | Fall 2021

A NON-TECHNICAL REVIEW OF QUALIFIED RETIREMENT PLAN LEGISLATIVE AND ADMINISTRATIVE ISSUES SAVE MORE FOR RETIREMENT IN 2022 ON NOVEMBER 4, 2021, THE IRS ANNOUNCED THE COST OF 2022 2021 2020 $20,500 $19,500 $19,500 $6,500 $6,500 $6,500 Annual Contribution Limit $61,000 $58,000 $57,000 of living” from year to year. Here are the highlights from the 2022 Annual Contribution Limit including Catch-Up Contributions $67,500 $64,500 $63,500 limits: Annual Defined Benefit Limit $245,000 $230,000 $230,000 • The calendar year elective deferral limit increased from $19,500 Compensation Limits Maximum Plan Compensation $305,000 $290,000 $285,000 Income Subject to Social Security $147,000 $142,800 $137,700 Key EE Compensation Threshold $200,000 $185,000 $185,000 Highly Compensated EE Threshold $135,000 $130,000 $130,000 $14,000 $13,500 $13,500 SIMPLE Catch-Up Contributions $3,000 $3,000 $3,000 Individual Retirement Account (IRA) $6,000 $6,000 $6,000 IRA Catch-Up Contribution $1,000 $1,000 $1,000 LIVING ADJUSTMENTS AFFECTING THE DOLLAR LIMITATIONS Annual Plan Limits FOR RETIREMENT PLANS FOR 2022. In October, the Social Contribution and Benefit Limits Security Administration announced a benefit increase of 5.9%, Elective Deferral Limit the largest increase in nearly 40 years. Following suit, many retirement plan limits have increased as well over the 2021 levels. Contribution and benefit increases are intended to allow participant contributions and benefits to keep up with the “cost to $20,500. • The elective deferral catch-up contribution remains unchanged at $6,500. This contribution is available to all participants age 50 or older in 2022. • The maximum allowable dollar amount that can be contributed to a participant’s retirement account in a defined contribution plan increased from $58,000 to $61,000. The limit includes both employee and employer contributions as well as any allocated forfeitures. For those over age 50, the annual addition limit increases by $6,500 to include catch-up contributions. • The maximum amount of compensation that can be considered in retirement plan compliance has been raised from $290,000 Catch-Up Contributions IRA Limits SIMPLE Plan Elective Deferrals to $305,000. • Annual income subject to Social Security taxation has increased to $147,000 from $142,800. BENEFIT INSIGHTS If you have any questions on how these increases will affect your plan, please contact your representative. ■ FA L L 202 1