On November 4, 2021, the IRS released its annual notice, Notice 2021-61, setting forth the various dollar limitations for contributions and benefits under qualified retirement plans, including 401(k) plans.

The new limits will go into effect as of January 1, 2022.

As in prior years, the law requires that some of these limits be adjusted to reflect increases in the most recent cost-of-living index, while other limits remain unchanged.

This year, due to higher inflation, there are more changes for 401(k) plans than there were last year

401(k) Adjusted Limits for 2022:

The most frequently encountered dollar limits for 401(k) plans, that will increase in 2022 from the parallel dollar limits that are in effect for 2021, are as follows:

  • The dollar limit for employee 401(k) elective deferral contributions is increased from $19,500 in 2021 to $20,500 in 2022.
  • The maximum amount of compensation that may be taken into account for qualified plan (including 401(k) plan) purposes is increased from $290,000 in 2021 to $305,000 in 2022.
  • The maximum contribution limit on “annual additions,” which takes into account both employer and employee contributions under defined contribution plans (including 401(k) plans), is increased from $58,000 in 2021 to $61,000 in 2022.
  • The dollar limit threshold for determining who is a “highly compensated employee” for 401(k) plan nondiscrimination testing purposes is increased from $130,000 in 2021 to $135,000 in 2022.
  • The dollar limit threshold for determining who is a “key employee” for purposes of determining whether a 401(k) plan is “top-heavy” (another type of nondiscrimination test) is increased from $185,000 in 2021 to $200,000 in 2022.

“Catch-Up” Limit Remains Unchanged for 2022.

Remarkably, the dollar limit for “catch-up” contributions (which applies to employees who reach age 50 or older at any time during the calendar year) remains unchanged from the 2021 limit at $6,500 in 2022. ($6,500 was also the dollar amount in effect for 2020.)

Other Adjusted Limitations for 2022:

Additionally, Notice 2021- 61 also makes certain other retirement plan-related adjustments for 2022, including adjustments to the dollar limits that apply to:

  • Defined benefit retirement plans;
  • Individual retirement accounts (“IRAs”);
  • “Roth” IRAs;
  • Code Section 403(b) plans;
  • Governmental plans;
  • Employee stock ownership plans (“ESOPs”);
  • Simplified employee pensions (“SEPs”);
  • “SIMPLE” retirement plans;
  • Limits applicable to multiemployer plans; and
  • Determinations as to the Retirement Savings Contribution Credit for low-income and moderate-income level employees.

As is the case with 401(k) plan limits, certain of the above limits increase for 2022, while others remain unchanged from the dollar limits in effect for 2021. For details on these limits, please refer to the Notice itself or the corresponding IRS News Release.

NOTE: Although this article is not intended to address the limits applicable to IRAs, it is intriguing to note that, despite a 30-year high in inflation, the IRS did not increase the maximum contribution limit for IRAs, leaving the generally applicable annual limit unchanged since 2019 at $6,000. IRA holders may wish to consult Notice 2021-61 or the News Release cited above for further information.

Social Security Taxable Wage Base for 2022. In a separate release, the U.S. Social Security Administration (“SSA”) announced on October 13, 2021 that the Social Security taxable wage base for 2021 will increase from $142,800 in 2021 to $147,000 in 2022. Once an employee reaches the annual limit, his or her additional wages are no longer subject to Social Security withholding, though they can still count as “compensation” for retirement plan purposes up to the annual compensation cap ($305,000 in 2022), subject to plan rules.


  • Plan administrators, Human Resources personnel, payroll managers, and others affected by the adjusted limits should make sure that their systems are timely updated to reflect the 2022 changes, and to inform employees about the new 2022 dollar limits in all relevant communications (for example, year-end open enrollment materials).
  • Summary plan descriptions (“SPDs”), plan guidelines and procedures, and similar documents also will need to be reviewed and revised, as required.
  • Notably, most plan documents themselves do not require amendments to reflect the adjusted limits. If you are in doubt, please ask your ERISA attorney or advisor to review your plan document for any needed changes.

The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. As always, for specific questions concerning your 401(k) retirement plan, or for help in operating your plan during the current COVID-19 crisis, please consult your own ERISA attorney or professional advisor.

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