COLA 2022: Cost-of-Living Adjustments

TRI-AD presents the Cost-of-Living Adjustments (COLAs) for 2022. These limits are provided each year by the Internal Revenue Service and are effective as of January 1, 2022.

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Retirement Cost-of-Living Adjustments
Maximum Dollar Limitations

Employee Deferral Limits

2022

2021 2020 2019

2018

401(k) Contribution $20,500

19,500

19,500 19,000 18,500
403(b) Contribution

$20,500

19,500

19,500 19,000 18,500

457 Contribution

$20,500

19,500 19,500 19,000 18,500

SIMPLE 401(k)/IRA

$14,000 13,500 13,500 13,000 12,500
Employee Catch-Up Limits

401(k), 403(b), 457

$6,500 6,500 6,500 6,000 6,000

SIMPLE 401(k)/IRA

$3,000 3,000 3,000 3,000

3,000

Other Plan Limitations
Compensation Cap

$305,000

290,000

285,000 280,000 275,000
Defined Benefit Plan Maximum Benefit

$245,000

230,000

230,000 225,000

220,000

Defined Contribution Plan Maximum Contribution

$61,000

58,000

57,000 56,000

55,000

Highly Compensated Employees’ Compensation Exceeding

$135,000

130,000 130,000 125,000

120,000

Key Employee Officer Compensation

$200,000

185,000 185,000 180,000

175,000

Key Employee 1% Owner

$150,000

150,000 150,000 150,000

150,000

SEP Participation Coverage Compensation Level

$650

650 600 600

600

ESOP Threshold for 5-Year Distribution Period

$1,230,000

1,165,000

1,150,000 1,130,000

1,105,000

ESOP Incremental Threshold for Extending 5-Year Distribution Period (max 5 additional years)

$245,000 230,000 230,000 225,000

220,000

Social Security Taxable Wage Bases
– Social Security

$147,000

142,800

137,700 132,900

128,400

– Medicare

No Limit

No Limit No Limit No Limit

No Limit

Social Security Tax Rates By Percentage
– Social Security – Employer

6.20

6.20 6.20 6.20

6.20

– Social Security – Employee

6.20

6.20 6.20 6.20

6.20

– Medicare – Employer and Employee

1.45

1.45 1.45 1.45

1.45

– Per Employer/Per Employee Combined Rate

7.65

7.65 7.65 7.65

7.65

Combined Rate

15.30

15.30 15.30 15.30

15.30

Additional Medicare Tax on Wages above $200,000 – Employee Only

.9*

.9* .9* .9*

.9*

*The Affordable Care Act imposes an additional .9% Medicare tax on wages above $200,000 ($250,000 for married couples filing jointly, $125,000 for married couples filing separately and $200,000 for other filers). Employers are required to withhold the additional .9% Medicare tax (a total of 2.35%) on wages above $200,000 regardless of the employee’s tax filing status. Employers do not match this additional tax.

Health & Welfare Cost-of-Living Adjustments
Maximum Dollar Limitations

Health Care Flexible Spending Accounts in a Cafeteria Plan

2022

2021 2020

2019

Maximum Contribution

$2,850

2,750 2,750

2,700

Dependent Care Flexible Spending Accounts in a Cafeteria Plan
Maximum Contribution

$5,000

10,500* 5,000

5,000

Maximum Contribution if Married Filing Separately

$2,500

5,250* 2,500

2,500

Dependent Care Tax Credit on Personal Tax Return1
1 Qualifying Individual

$3,000

8,000*

3,000 3,000
2 or more Qualifying Individuals

$6,000

16,000*

6,000 6,000
Qualified Relative Income Allowance
Maximum Amount a qualified relative can earn and still be considered a dependent for tax purposes

$4,400

4,300

4,300

4,250

Qualified Transportation Plan2
Parking – Monthly Limit

$280

270

270

265

Transit Passes and Vanpooling (Combined) – Monthly Limit

$280

270

265

260

Bicycle benefit (Employer-funded) – Monthly Limit

$20

20

20

20

Adoption Assistance Program3
Maximum Exclusion for Employer-Provided Program4

$14,890

14,440 14,300

14,080

Adoption Tax Credit Limit

$14,890

14,440 14,300 14,080
Modified Adjusted Gross Income Limits for Employer-Provided
Adoption Assistance Program and Tax Credit

Full credit if adjusted gross income below

$223,410

216,660 214,520 211,160

Phased credit if adjusted gross income between

$223,410–$263,410

216,660–
$256,660
214,520–
254,520

211,160–
251,160

No credit allowed for adjusted gross income above

$263,410

256,660 254,520 251,160
Educational Assistance Programs
Maximum nontaxable educational assistance benefit

$5,250

5,250 5,250 5,250
Health Savings Accounts

Contribution Limit per Individual

$3,650

3,600

3,550

3,500

Contribution Limit per Family

$7,300

7,200 

7,100 7,000

Catch-up Contribution for Age 55 and Older

$1,000

1,000 1,000

1,000

Out-of-pocket Maximum per Individual

$7,050

7,000 6,900

6,750

Out-of-pocket Maximum per Family

$14,100

14,000 13,800 13,500

Minimum Deductible per Individual

$1,400

1,400

1,400 1,350

Minimum Deductible per Family

$2,800

2,800

2,800

2,700

Highly Compensated Employee Compensation Exceeding

$135,000

130,000 130,000

125,000

Key Employee Officer Compensation

$200,000

185,000

185,000 180,000
Key Employee 1% Owner

$150,000

150,000 150,000

150,000

*Increased limits due to COVID-19 legislative relief.
1 Credit may be adjusted based on the level of the taxpayer’s adjusted gross income and is reduced by amounts excluded from income under a Dependent Care Reimbursement Account plan sponsored by an employer.
2 The Tax Cuts & Jobs Act of 2017 changed the bicycle benefit to a taxable benefit for years after 2017 and before 2026.
3
An employer-sponsored Adoption Assistance Program may be a stand-alone program or contained in a Cafeteria Plan.
4 If employer-sponsored Adoption Assistance Program is contained in a Cafeteria Plan, this is the maximum limit within the plan year.
5 If employer-sponsored Adoption Assistance Program is contained in a Cafeteria Plan, this is the maximum limit within the plan year.

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