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2022 Retirement Contribution Limits are on the Rise

2022 Retirement Contribution Limits are on the Rise

November 08, 2021
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It's that time of year many retirement savers look forward to. In November, the Internal Revenue Service usually announces its annual cost-of-living adjustments for retirement plans and IRAs. This year is no exception. On November 4, the IRS released Notice 2021-61. We've highlighted the key changes that savers and retirement plan sponsors should know about, as well as several that remain unchanged from 2020.  

  • The elective deferral limit is increasing from $19,500 to $20,500.
  • The catch-up contribution limit for employees ages 50 and older remains unchanged at $6,500.
  • The aggregate contribution limit for defined contribution plans is increasing from $58,000 to $61,000.
  • The annual compensation limit used to calculate contributions is increasing from $290,000 to $305,000.
  • The limitation on the annual benefit under a defined benefit is increasing from $230,000 to $245,000. (For a participant who separated from service before January 1, 2022, the limitation for defined benefit plans under Section 415(b)(1)(B) can be computed by multiplying the participant’s compensation limitation, as adjusted through 2021, by 1.0534.)
  • The dollar limit used in the definition of “key employee” in a top-heavy retirement plan is increasing from $185,000 to $200,000.
  • The dollar limit used in the definition of “highly compensated employee” is increasing from $130,000 to $135,000.

 The table below displays 2021 and 2022 limits for most retirement plans and IRAs.

1 Employee deferrals to all 401(k) and 403(b) plans must be aggregated for purposes of this limit.

2 Contributors must be age 50 or older during the calendar year.

3 All compensation from a single employer (including all members of a controlled group) must be aggregated for purposes of this limit.

If you're able to take advantage of these increased deferral limits, you should. The amount you yourself can contribute to your plan has a far greater impact on how large your retirement nest egg may ultimately be than any other factor, including investment results. 


This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax preparer, professional tax advisor, and/or a lawyer.




Eric Kristenson is a financial advisor and retirement plan advisor located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or


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