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2023 Cost of Living Adjustments for Your Retirement Plan Administration 2023 Cost of Living Adjustments for Your Retirement Plan Administration

2023 Cost of Living Adjustments for Your Retirement Plan Administration

On October 21, the Internal Revenue Service announced its annual cost of living adjustments for calendar year 2023. Importantly for retirement plan sponsors, administrators, and participants, certain plan limits are increasing from the 2022 limits due to inflationary changes in the cost-of-living index. For example, the overall defined benefit annual limitation (Internal Revenue Code (“IRC”) §415(b)) increased to $265,000 (up from $245,000), the overall defined contribution annual limitation (IRC §415(c)) increased to $66,000 (up from $61,000), the annual compensation limit (IRC § 401(a)(17), IRC § 404(l), IRC § 408(k)(3)(C) and IRC § 408(k)(6)(D)(ii)) increased to $330,000 (up from $305,000), the limitation on the exclusion for elective deferrals (IRC § 402(g)(1)) increased to $22,500 (up from $20,500)), and the catch-up deferral for people aged 50 and older (IRC § 414(v)(2)(B)(i)) increased to $7,500 (up from $6,500). Notably, the increases to the IRC § 415(b) defined benefit annual limitation, the IRC § 415(c) defined contribution annual limitation, the IRC § 401(a)(17) annual compensation limitation, and the IRC § 414(v)(2)(B)(i) catch-up deferral for people aged 50 and older are the largest increases in recent years.

To assist plan sponsors, Ice Miller's updated Cost of Living Adjustment (COLA) chart lists the cost-of-living adjustments to retirement plan limitations for the years 2013 through 2023. We hope that this chart (which includes the adjusted limits, as well as Pension Benefit Guaranty Corporation guarantees and Social Security and Medicare contribution rates and wage bases for the past 10 years) will serve as a helpful reference tool. If you would like to discuss the impact of these cost-of-living adjustments, please do not hesitate to contact the attorney with whom you work in the Ice Miller Employee Benefits Group.  If you would like a laminated copy of the chart, please e-mail your name and address to diane.sweeney@icemiller.com.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
 
 
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