The Internal Revenue Service has announced cost-of-living adjustments that affect the limitations of pension plans and qualified health plans. The increases come into effect on January 1, 2022.
Employee contribution limits (optional carry-overs) for the 401 (k), 403 (b) and most 457 plans will increase, but the catch-up contribution limits for employees 50 and over remain unchanged. The annual benefit limit for defined benefit plans and the contribution limit for defined contribution plans will increase slightly.
The IRS released 2022 contribution limits for health savings accounts (HSAs) and maximum disbursement amounts for high-deductible health plans (HDHP) in May 2021, although the minimum deductibles for HDHP have remained unchanged. A previous customer alert stated that the health flexible spending account (FSA) contribution limits would also remain unchanged, but on November 10, the IRS released updated FSA limits for 2022 (increasing from $ 100 to 2,850 $). In light of the late publication date, many employers have retained the limit of $ 2,750 for 2021, in order to facilitate open enrollment in 2022. The FSA deferral limit continues to be 20% of the annual contribution limit, although special COVID-19 relief gives employers the option to allow employees to carry over their unspent 2021 FSA balance into 2022. See IRS Notice 2021-15.
A summary of the limits and thresholds is provided in the table below.
|
Pension plan limits |
2021 |
2022 |
|
401 (k), 403 (b), 457 Optional carryover limit |
$ 19,500 |
$ 20,500 |
|
Catch-up contribution limit (50 years and over) |
$ 6,500 |
$ 6,500 |
|
Annual benefit limit for the defined benefit plan |
$ 230,000 |
$ 245,000 |
|
Annual contribution limit of the defined contribution plan |
$ 58,000 |
$ 61,000 |
|
Annual compensation limit |
$ 290,000 |
$ 305,000 |
|
Highly paid employee threshold |
$ 130,000 |
$ 135,000 |
|
Key employee threshold |
$ 185,000 |
$ 200,000 |
|
IRA contribution limit |
$ 6,000 |
$ 6,000 |
|
Catch-up IRA Contribution Limit (50+) |
$ 1,000 |
$ 1,000 |
|
Limitations of the health care plan |
2021 |
2022 |
|
FSA Santé contribution limit |
$ 2,750 |
$ 2,850 |
|
FSA Santé deferral limit |
$ 550 * |
$ 570 |
|
HSA contribution limit (individual) |
$ 3,600 |
$ 3,650 |
|
HSA contribution limit (Family) |
$ 7,200 |
$ 7,300 |
|
HSA catch-up contribution limit (55 years and over) |
$ 1,000 |
$ 1,000 |
|
Minimum HDHP deductible (individual) |
$ 1,400 |
$ 1,400 |
|
Minimum HDHP deductible (family) |
$ 2,800 |
$ 2,800 |
|
HDHP maximum amount payable (individual) |
$ 7,000 |
$ 7,050 |
|
Maximum amount payable HDHP (Family) |
$ 14,000 |
$ 14,100 |
* Special COVID-19 relief gives employers the option to allow employees to carry over their unspent FSA 2021 balance into 2022.
Remember that legal principles can change and vary widely in their application to specific factual circumstances. You should consult a lawyer about your individual plan, any plan changes, and member notices.
© 2021 Jones Walker LLPRevue nationale de droit, volume XI, number 315
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