The IRS and Social Security Administration have announced the 2023 cost-of-living adjustments for retirement plans.
Here are some of the more significant limitations affecting employee benefit plans:
- The maximum amount that may be deferred under 401(k), 403(b) and 457(b) plans, not including catch-up deferrals, under Internal Revenue Code Section 402(g) limit, is increased from $20,500 to $22,500.
- The IRC Section 415 maximum annual benefit under a defined benefit plan is increased by $20,000 to $265,000.
- The IRC Section 415 maximum annual additions under a defined contribution plan will be increased by $5,000 to $66,000, subject to the overall limitation of 100% of compensation.
- The highly compensated employee threshold dollar limit is increased to $150,000.
- The maximum amount of compensation that may be considered for benefit purposes under a qualified plan will be increased from the current limit of $305,000 to $330,000.
- The catch-up deferrals to 401(k), 403(b) and 457 plans is increased to $7,500. Please note that the catch-up deferrals are only available for plan participants who turn 50 at any time during the plan year and who may no longer make deferrals because of plan or regulatory limitations.
- The Social Security taxable wage base is increased by $13,200 to $160,200.
If you have questions about any of these adjustments, please contact me or anyone in the Barley Snyder Employee Benefits Group.