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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.
2020 | 2021 | 2022 |
401(k), 403(b), 457 Contributions
Elective Deferrals | $ 19,500 | $ 19,500 | $ 20,500 |
Catch-Up Contributions | 6,500 | 6,500 | 6,500 |
IRAs
IRA Contributions | 6,000 | 6,000 | 6,000 |
IRA Catch-Up Contributions | 1,00 | 1,000 | 1,000 |
SIMPLE Plan
Elective Deferrals | 13,500 | 13,500 | 14,000 |
Catch-Up Contributions | 3,000 | 3,000 | 3,000 |
Simplified Employee Pensions (SEPs)
Minimum Compensation 408(k)(2)(c) | 600 | 650 | 650 |
Maximum Compensation 408(k)(3)(c) | 285,000 | 290,000 | 305,000 |
Maximum Contribution | 57,000 | 58,000 | 61,000 |
401(k), 403(b), 457 Plans
Annual Compensation 401(a)(17)/404(I) | 285,000 | 290,000 | 305,000 |
Defined Contribution Limits 415(c)(1)(A) | 57,000 | 58,000 | 61,000 |
ESOP Limit 409(o)(1)(c) – account balance | 1,150,000 | 1,165,000 | 1,230,000 |
ESOP Limit 409(o)(1)(c) – lengthening 5-year period | 230,000 | 230,000 | 245,000 |
Miscellaneous
Highly Compensated Employee | 130,000 | 130,000 | 135,000 |
Defined Benefit Annual Limit | 230,000 | 230,000 | 245,000 |
Key Employee Compensation | 185,000 | 185,000 | 200,000 |
Social Security Taxable Wage Base | 137,700 | 142,800 | 147,000 |
Tyler A. Chaplin?>
CPA, MTax
Senior Manager, Taxation Services
330.255.2453
tchaplin@bmf.cpa
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