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November 15, 2021

401(k) Plan Limits Updated for 2022 by the IRS

Each year the Internal Revenue Service reviews the limitations for benefit plan contributions and other supporting factors based on inflationary increases and other factors. Here are several limits that have been updated for 2022:

  • For individual 401(k) participants, the maximum amount that can be contributed (pre-tax or after-tax Roth) to  401(k) plans has been increased to $20,500. This is an increase from $19,500 that was applicable for 2021 and 2020. See below for the catch-up contribution limits.
  • The total annual contribution to a 401(k) Plan increased from $58,000 to $61,000 when including all contribution types.
  • The catch-up amount contribution limit remains unchanged at $6,500, for participants aged 50 and older.
  • The limit on compensation that can be included for benefit purposes was increased from $290,000 to $305,000.
  • The annual amount used to determine a highly compensated employee for discrimination testing purposes was raised from $130,000 to $135,000.
  • The dollar amount limitation concerning the definition of a “key employee’ in a top-heavy plan was raised from $185,000 to $200,000.

Plan Sponsors should ensure those responsible for benefit administration within their companies are aware of these changes and the payroll and benefit systems are updated accordingly. For more information on this subject and to see additional benefit plan limit adjustments for other plan types, visit the IRS website.

Looking for a 401(k) Audit Partner?

Retirement plans can be very complex. As an innovative firm we specializes in 401(k) audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. Utilizing modern technology, it is possible to assist you entirely “off-site”, and with little or no distraction to your daily office routine.

At Anders we also offer flat-fee pricing for 401(k) audits so there are no surprises when you receive your bill. To find out how we can assist your business, request your free consultation below or contact the team at (314)-886-7913 to talk about your specific 401(k) audit needs.

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