IRS releases 2022 retirement plan limitations

by | Nov 5, 2021


The IRS issued Notice 2021-61, which made modifications to the annual limits for retirement plans. These limits are updated annually for cost-of-living adjustments (with the exception of the IRA catch-up contribution limit, which is set by statute and is not impacted by cost-of-living adjustments). Most of the limits were adjusted for cost-of-living adjustments for 2022, with the exception of the limit on catch-up contributions to an employer-provided plan (remains unchanged at $6,500 for 2022), the IRA contribution limit (remains unchanged at $6,000 for 2022) and the SIMPLE IRA and SIMPLE 401(k) catch-up limit (remains unchanged at $3,000 for 2022). A summary of the annual limits is below.

Effective Jan. 1, 2022, the following limits are in effect: 






401(k), 403(b) and 457 elective deferral limit





Catch-up contribution limit (age 50 and older)





Annual compensation limit





Defined contribution plan limit





Defined benefit plan limit





Definition of highly compensated employee





Key employee





IRA contribution limit





IRA catch-up contributions (age 50 and older)





SIMPLE IRA and SIMPLE 401(k) salary deferral limit





SIMPLE IRA and SIMPLE 401(k) catch-up limit






Income phase-out ranges for various IRA purposes increased from between $66,000 and $76,000 to between $68,000 and $78,000 for single and head-of-household taxpayers. Similar incremental changes were made to the limits for married filing jointly and married filing separately taxpayers. For more information, see Notice 2021-61.

Notable increases

The overall limit for employer and employee contributions to a defined contribution plan jumped from $58,000 to $61,000 and the annual accrual limit for a defined benefit pension plan moved up to $245,000 from last year’s $230,000. Both increases are three times larger than the historic pattern for these limits.

Additional considerations

The currently proposed version of the Build Back Better Act contains provisions that could impact these limits for high-income taxpayers. For example, should the act become effective, taxpayers would be prevented from making contributions to a Roth or traditional IRA if the contributions would result in a taxpayer’s aggregate IRA and defined contribution retirement account balances totaling $10 million or more. As these provisions are not yet enacted, it is important to revisit the impact of these limits should they become effective.


Taxpayers should be aware of the changes that the IRS made to retirement plan limits, which become effective Jan. 1, 2022. Employers and employees should review these limits and take any necessary action to prepare for these limit changes by January. For example, an employer should work with its third-party administrator to ensure that processes are in place to honor these limits, and employees should also be cognizant of these limits so that they are not exceeded. Employers that sponsor retirement plans that run on a fiscal year should be careful in applying these changes, as some limits are always calendar-year limits (e.g., the elective deferral limit), while other limits apply on a plan-year-beginning basis (e.g., the annual compensation limit). Taxpayers should also keep in mind that potential tax changes on the horizon could bring further changes to these limits.

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This article was written by Anne Bushman, Bill O’Malley, Lauren Sanchez and originally appeared on 2021-11-05.
2021 RSM US LLP. All rights reserved.

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

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