The Internal Revenue Service announced the 2023 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits, and the Social Security Administration announced its own cost-of-living adjustments for 2023.  All of the dollar limits, including the elective deferral contribution limit for 401(k), 403(b) and 457(b) plans, the annual compensation limit under 401(a)(17), the maximum annual contribution limit under Code Section 415(c) and the dollar limit for catch-up contributions (if age 50 or older) will increase from 2022 limits.

RETIREMENT PLAN LIMITS

2023 Limits 2022 Limits
401(k)/403(b)/457(b) Elective Deferrals $22,500 $20,500
Catch-Up Contribution (plans other than SIMPLE plans) $7,500 $6,500
SIMPLE Plan Employee Deferrals $15,500 $14,000
SIMPLE Plan Catch-Up Contributions $3,500 $3,000
Plan Maximum Annual Contribution – Defined Contribution Plans (Section 415(c)) $66,000 $61,000
Maximum Annual Benefit – Defined Benefit Plans (Section 415(b)) $265,000 $245,000
Compensation Limit under Section 401(a)(17) $330,000 $305,000
Highly Compensated Employee Definition under Section 414(q) $150,000 $135,000
Key Employees Officer Compensation for Top-Heavy Plans $215,000 $200,000
ESOP limit for determining the maximum account balance subject to the 5-year distribution limit $1,530,000 $1,230,000
ESOP dollar amount used for determining the lengthening of the 5-year distribution period $265,000 $245,000

 

Health Savings Account and High Deductible Health Plan Limits

Earlier this year, the IRS announced the inflation-adjusted amounts for health savings account and high-deductible health plans for 2023.  The HSA limit for self-only/family coverage will increase to $3,850 and $7,550, respectively for 2023. The maximum annual out-of-pocket expense limits for high deductible health plans for self-only and family coverage will increase in 2023.

2023 Limits 2022 Limits
HSA Contribution — Annual Contribution Limit
     Self-Only Coverage $3,850 $3,650
     Family Coverage $7,550 $7,300
     Catch-Up Contributions (age 55 or older) $1,000 $1,000
High Deductible Health Plan – Minimum Annual Deductible
     Self-Only Coverage $1,500 $1,400
     Family Coverage $3,000 $2,800
High Deductible Health Plan – Maximum Out of Pocket Limit
     Self-Only Coverage $7,500 $7,050
     Family Coverage $15,000 $14,100

 

HEALTH FLEXIBLE SPENDING ACCOUNTS

The IRS also released the health flexible spending account contribution rate for 2023.  The rate increased by $200 from 2022, to $3,050.  The carryover amount increased from $570 to $610 for 2023.

2023 Limit 2022 Limit
Health FSA Contribution Limit $3,050 $2,850
Carryover Amount $610 $570

 

SOCIAL SECURITY WAGES BASE

Social Security Wage Base

2023 Limit 2022 Limit
Social Security (FICA) Wage Base $160,200 $147,000

 

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