IRS Announces 2023 Cost-of-Living Adjustments for Retirement and Health and Welfare Benefit Plans
The Internal Revenue Service (IRS) has announced the cost-of-living adjustments for retirement and health and welfare benefit plans. The changes are effective January 1, 2023.
|
Limit Type |
Current 2022 Limit |
New 2023 Limit |
|
Defined Contribution Retirement Plan Elective Deferral Contribution Limit |
$20,500 |
$22,500 |
|
Catch-Up Contribution Limit |
$6,500 |
$7,500 |
|
Annual Contribution Limit |
$61,000 |
$66,000 |
|
Annual Benefit Limit |
$245,000 |
$265,000 |
|
IRA Contribution Limit |
$6,000 |
$6,500 |
|
IRA Catch-Up Contribution Limit |
$1,000 |
$1,000 |
|
Annual Compensation Limit |
$305,000 |
$330,000 |
|
Health FSA Contribution Limit |
$2,850 |
$3,050 |
|
Definition of Highly Compensated Employee |
$135,000 |
$150,000 |
|
ACA Affordability Percentage |
9.61% |
9.12% |
While employer-sponsored benefit plans need not be amended to account for these adjustments, plan sponsors should note the compensation and overall contribution limit increases for plan administration purposes.