On November 4, 2021, the IRS issued IRS Notice 2021-61, announcing the changes in pensions and benefits limits for 2022. The maximum limit on deferrals under 401(k), 403(b), and 457(b) plans rose from $19,500 to $20,500; the maximum annual additions (primarily to defined contribution plans) rose from $58,000 to $61,000; and the annual limit on compensation taken into account rose from $290,000 to $305,000. Most other limits also rose significantly.
A chart showing details, and limits from 1996 to 2022, can be found at this link.
Sections 403(b) and 457(b) plan compliance presents significant challenges for employee benefits counsel and plan administrators. Sponsors of 403(b) and 457(b) plans must consider the impact of recent regulatory and litigation developments to ensure strict compliance to avoid potential claims.
Tax-exempt organizations face special legal challenges in developing compensation packages for their executives. A new article published in the Lexis Practice Advisor provides practical guidance on developing benefits for executives of nonprofits.
The Tax Cuts and Jobs Act of 2017 made a number of changes affecting the compensation and benefits that governmental, church, and other tax-exempt organizations can provide to their employees. Given the short time between introduction and passage of the Act, it is not surprising that many of the new provisions are unclear in their application. Moreover, some of them may produce unintended consequences for these organizations.