Section 415 of the Internal Revenue Code (“Code”) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. The IRS released Notice 2021-61 (PDF) to provide for cost-of-living adjustments to dollar limitations for retirement plan benefits and contributions. This includes the following:
- Annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $230,000 to $245,000
- The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2022 from $58,000 to $61,000.
- The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $19,500 to $20,500.
- The annual compensation limit under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $290,000 to $305,000.
- The dollar limitation under section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $185,000 to $200,000.
- The limitation used in the definition of “highly compensated employee” under section 414(q)(1)(B) is increased from $130,000 to $135,000.