401k and Retirement Plan Limits for the Tax Year 2022
On November 4, 2021, the Internal Revenue Service announced that employees in 401k plans will be able to contribute up to $20,500 next year.
The IRS announced this and other changes in Notice 2021-61. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.
Highlights of Changes for 2021
Effective January 1, 2021, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) remains unchanged at $230,000.
For a participant who separated from service before January 1, 2021, the participant’s limitation under a defined benefit plan under § 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2020, by 1.0122.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased for 2021 from $57,000 to $58,000.
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This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor, or plan provider.