The IRS, in Notice 2021-61 has announced increased 401(k) plan limits for 2022. Here is what you need to know:

• 401(k) Deferral Limit is increased to $20,500 from $19,500. Note this increase applies to 403(b) plans as well.
• The Compensation which can be considered under a qualified plan is increased to $305,000 from $290,000.
• The limit for Highly Compensated Employees is increased to $135,000 from $130,000.
• The total contribution limit for a defined contribution plan is increased to $61,000 from $58,000.
• The Catch-up contribution limit for individuals age 50 or over remains at $6,500.

Additionally, the IRS announced limits related to Health Flexible Spending Accounts:

• The Health Flexible Spending Account contribution limit is now increased to $2,850 from $2,750.
• The Health Flexible Spending Account Carry over limit is $570 for the 2022 Plan Year.
• The Taxable Wage Base for Social Security Tax is increased to $147,000 from $142,800.

If you have questions about 401(k) plan limits or FSA, please contact a member of Carmody’s Labor & Employment group.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.