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IRS Releases 2022 Benefit Plan Limits and Thresholds — Updated FSA Limits

The Internal Revenue Service has announced cost-of-living adjustments that affect limitations on qualified retirement plans and health plans. The increases take effect on January 1, 2022.

Employee contribution limits (elective deferrals) for 401(k), 403(b), and most 457 plans will increase, but the catch-up contribution limits for employees age 50 and over remain unchanged. The annual benefit limit for defined benefit plans and the contribution limit for defined contribution plans will increase slightly.

The IRS issued the 2022 contribution limits for Health Savings Accounts (HSAs) and maximum out-of-pocket amounts for High Deductible Health Plans (HDHPs) in May 2021, although minimum deductibles for HDHPs remained unchanged. A prior client alert indicated that health Flexible Spending Account (FSA) contribution limits would also remain unchanged, but on November 10 the IRS released updated FSA limits for 2022 (increasing by $100, to $2,850). In light of the late release date, many employers retained the 2021 limit of $2,750, to facilitate 2022 open enrollment. The FSA carryover limit continues to be 20% of the annual contribution limit, although special COVID-19 relief gives employers the option to allow employees to carry over their unspent 2021 FSA balance into 2022. See IRS Notice 2021-15.

A summary of the limits and thresholds is provided in the table below.

Retirement Plan Limits

2021

2022

401(k), 403(b), 457 Elective Deferral Limit

$19,500

$20,500

Catch-Up Contribution Limit (age 50-plus)

$6,500

$6,500

Defined Benefit Plan Annual Benefit Limit

$230,000

$245,000

Defined Contribution Plan Annual Contribution Limit

$58,000

$61,000

Annual Compensation Limit

$290,000

$305,000

Highly Compensated Employee Threshold

$130,000

$135,000

Key Employee Threshold

$185,000

$200,000

IRA Contribution Limit

$6,000

$6,000

IRA Catch-Up Contribution Limit (age 50-plus)

$1,000

$1,000

 

Health Plan Limits

2021

2022

Health FSA Contribution Limit

$2,750

$2,850

Health FSA Carryover Limit

$550*

$570

HSA Contribution Limit (Individual)

$3,600

$3,650

HSA Contribution Limit (Family)

$7,200

$7,300

HSA Catch-Up Contribution Limit (age 55-plus)

$1,000

$1,000

HDHP Minimum Deductible (Individual)

$1,400

$1,400

HDHP Minimum Deductible (Family)

$2,800

$2,800

HDHP Maximum Out-of-Pocket Amount (Individual)

$7,000

$7,050

HDHP Maximum Out-of-Pocket Amount (Family)

$14,000

$14,100

 

*Special COVID-19 relief gives employers the option to allow employees to carry over their unspent 2021 FSA balance into 2022.

Remember that legal principles may change and vary widely in their application to specific factual circumstances. You should consult with counsel about your individual plan, any plan amendments, and participant notices.

© 2022 Jones Walker LLPNational Law Review, Volume XI, Number 315
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About this Author

Tim Brechtel Employee Benefits Attorney Jones Walker
Partner

Tim Brechtel began his career with the national accounting firm PricewaterhouseCoopers. His current practice focuses on assisting employers with establishing, administering, merging, and terminating qualified retirement plans, such as 401(k) plans and employee stock ownership plans (ESOPs), as well as nonqualified deferred compensation arrangements under Code Section 409A, health plans, cafeteria plans, severance plans, separation agreements, health savings accounts, flexible spending accounts, transportation, and other fringe benefit plans. His retirement plan...

504-582-8236
Shawn J. Daray Associate New Orleans Tax Practice Group
Associate

Prior to joining Jones Walker, Shawn served as an extern for the Litigation Division of the Louisiana Department of Revenue, where he published articles on effects of the Amazon Tax for online retailers and state retroactive tax laws.

Shawn was previously a summer associate where he researched contract, corporate, and tax law on transactional issues for a tax and maritime firm. Shawn also drafted memorandum on maritime lien priority and limitation of liability.

504-582-8488
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