2023 IRS Benefits & Contributions Limits Announced
(Posted on October 24, 2022 by )


irsOn October 24, 2022, the IRS issued IRS Notice 2022-55, announcing the changes in pensions and benefits limits for 2023. With inflation higher this year than in prior years, the changes were substantial. The maximum limit on deferrals under 401(k), 403(b), and 457(b) plans rose from $20,500 to $22,500; the maximum annual additions (primarily to defined contribution plans) rose from $61,000 to $66,000; and the annual limit on compensation taken into account rose from $305,000 to $330,000. Most other limits also rose significantly.

A chart showing details, and limits from 1996 to 2023, can be found at this link.

 

 
 

Determination Letters for Governmental Plans Don’t Address Pick-Up Contributions and Excess Benefit Arrangements
(Posted on January 23, 2015 by )


irsThe IRS has issued a reminder that governmental plan sponsors who apply for IRS determination letters covering the qualified status of their plans can’t rely on a favorable letter for whether:

  • contributions made to the plan are the employer’s “pick-up contributions” (i.e., pretax employee contributions under section 414(h)(2) of the Internal Revenue Code), or
  • the plan has a qualified governmental excess benefit arrangement (i.e., a separate trust that provides only a participant’s annual benefit in excess of the limits under Internal Revenue Code section 415).

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Final IRS Regulations Clarify Maximum Limits for Governmental Qualified Plans
(Posted on April 5, 2007 by )


On April 5, 2007, the IRS proposed new regulations under section 415 of the Internal Revenue Code (IRC), as amended. Section 415 limits the benefits that may be paid by defined benefit plans and contributions that may be made to defined contribution plans. While some of the provisions may be a restatement of the current rules or a codification of guidance issued over the years since the current regulations were adopted, other provisions may represent new interpretations that need to be studied carefully. Read more

Future Cost-of-Living Increases Included in 415(b) Calculation
(Posted on January 4, 2005 by )


Private Letter Ruling 200452039 discussed the situation of a plan that provided a 3% cost-of-living adjustment to the benefits of each retired participant each year, beginning on the January 1 following the third anniversary of the participant’s retirement date. The private letter ruling held, in effect, that a participant whose annual benefit beginning in 2005 was equal to the dollar limit for 2005 ($170,000 per year), but whose benefit was subject to a cost of living increase starting in January 2009, would be in violation of the limit. Read more