2022 Cost-of-Living Adjustments (COLAs)
November 30, 2021 Tax Advisor

The IRS has announced the 2022 cost-of-living adjustments (COLAs), which impact retirement plans for more than 70 million Americans. These taxpayers will get a 5.9% increase in monthly Social Security benefits and supplemental security income payments in 2022. The COLA is based on three months of Consumer Price Index data, which reflects that prices have risen dramatically since the pandemic began, causing much financial stress for beneficiaries who live on a fixed income. We’ve compiled a side-by-side comparison on the dollar limitations for benefits and contributions over the past three years below.

202020212022

401(k), 403(b), 457 Contributions

Elective Deferrals$ 19,500$ 19,500$ 20,500
Catch-Up Contributions6,5006,5006,500

IRAs

IRA Contributions6,0006,0006,000
IRA Catch-Up Contributions1,001,0001,000

SIMPLE Plan

Elective Deferrals13,50013,50014,000
Catch-Up Contributions3,0003,0003,000

Simplified Employee Pensions (SEPs)

Minimum Compensation 408(k)(2)(c)600650650
Maximum Compensation 408(k)(3)(c)285,000290,000305,000
Maximum Contribution57,00058,00061,000

401(k), 403(b), 457 Plans

Annual Compensation 401(a)(17)/404(I)285,000290,000305,000
Defined Contribution Limits 415(c)(1)(A)57,00058,00061,000
ESOP Limit 409(o)(1)(c) – account balance1,150,0001,165,0001,230,000
ESOP Limit 409(o)(1)(c) – lengthening 5-year period230,000230,000245,000

Miscellaneous

Highly Compensated Employee130,000130,000135,000
Defined Benefit Annual Limit230,000230,000245,000
Key Employee Compensation185,000185,000200,000
Social Security Taxable Wage Base137,700142,800147,000

About the Authors

Tyler A. Chaplin
Tyler A. Chaplin
CPA, MTax
Manager, Taxation Services

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