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IRS Announces 2022 Employee Benefit Plan Limits

The IRS and the Social Security Administration recently announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2022. The table below compares the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2021 and 2022.*

Please note that Lifetime Benefit Solutions will automatically increase the Health FSA maximum salary reduction limit for all clients except for those who have an amount less than the current maximum. The Health FSA carryover limit will only be increased if you amended your Health FSA in 2020 to include the $550 carryover limit (or as indexed in future years). If your account does not want to increase to the Health FSA maximum salary reduction limit or carryover limit, please contact your dedicated administrator.

Health Flexible Spending Accounts 2022 2021
Maximum salary reduction limit $2,850 $2,750
Health FSA Carryover Limit $570 $550

 

Dependent Care Flexible Spending Accounts± 2022 2021
If employee is married and filing a joint return or if the employee is a single parent

$5,000

$5,000 

If employee is married but filing separately $2,500 $2,500

(2021 limits raised to $10,500 for 2021 based on the  American Rescue Plan Act passed March 11, 2021)

  2022 2021
Expected Benefit Health Reimbursement Arrangements $1,800 $1,800

Qualified Transportation Fringe Benefit and Qualified Parking (monthly limit)

$280 $270
Adoption Assistance Exclusion $14,890 $14,440

 

High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA)
  2022 2021
HDHP — Maximum annual out-of-pocket limit (excluding premiums):
Self-only coverage $7,050 $7,000
Family coverage $14,100 $14,000
HDHP — Minimum annual deductible:
Self-only coverage $1,400 $1,400
Family coverage $2,800 $2,800
HSA — Annual contribution limit:
Self-only coverage $3,650 $3,600
Family coverage $7,300 $7,200
Catch-up contributions (age 55 or older)± $1,000 $1,000

ACA In-Network Out-Of-Pocket Limits For Non-Grandfathered Plan

Note: This is different than the HDHP Maximum out-of-pocket limit described above

Self-only coverage $8,700 $8,550
Family coverage $17,400 $17,100

 

Retirement Plan Limits 2022 2021
Annual compensation limit $305,000 $290,000
401(k), 401(k) Roth & 403(b) contributions $20,500 $19,500
Catch-up contributions (if age 50 or older) $6,500 $6,500
Highly compensated employee threshold $135,000 $130,000
Key employee officer compensation threshold $200,000 $185,000
Defined benefit plan annual benefit and accrual limit $245,000 $230,000
Defined contribution plan annual contribution limit $61,000 $58,000
Social Security Taxable Wage Base $147,000 $142,800

 

Plan sponsors should update payroll and plan administration systems for the 2022 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.


* The dollar limits are generally applied on a calendar year basis; however, certain dollar limits are applied on a plan-year, tax-year, or limitation-year basis.
± Not indexed for cost-of-living adjustments.