The Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs chart has now been updated to reflect recent developments, including:
On 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.
The Social Security Administration today announced that the wage base for 2023 will increase to $160,200 from $147,000. The limits for 1996 through 2023 are shown at this link.
The 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:
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
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
The IRS has announced that the Directory of Practitioners on its site “is unavailable pending redesign considerations.” However, you can still get a copy of the latest monthly directory in PDF format by clicking here. Read more IRS links.
Carol Calhoun was quoted in the article in the January 15, 2002 issue of the Milwaukee Journal Sentinel, which questioned whether pension benefits provided for top Milwaukee government officials might violate IRS limits.