IRS Announces 2023 Retirement Plan Limits

 The IRS recently announced the 2023 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS significantly increased the applicable limits for 2023 due to the high rate of inflation in 2022. The following limits apply to retirement plans in 2023:

  • The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $22,500.
  • The limit on additional catch-up contributions by participants age 50 or older increased to $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2023 is $30,000.
  • The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $66,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $265,000 for defined benefit plans.
  • The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $330,000.
  • The dollar- level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $150,000 (which, based on the look-back rule, is applicable for HCE determinations in 2024 based on compensation in 2023).
  • The dollar- level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $215,000.

We have compiled a chart summarizing the key limits below, including how they compare with those in the previous year. Download a printable version of the chart.

2023 2022 2021
401(k)/403(b) Plan Deferral Limit $22,500 $20,500 $19,500
Catch-Up Contributions (401(k), 403(b) & Governmental 457(b) Plans) $7,500 $6,500 $6,500
Defined Contribution Dollar Limit $66,000 $61,000 $58,000
Defined Benefit Annual Limit $265,000 $245,000 $230,000
Pay Threshold for Determining Highly Compensated Employee $150,000 (for determinations in 2024) $135,000 (for determinations in 2023) $130,000 (for determinations in 2022)
Annual Compensation Limit $330,000 $305,000 $290,000
457(b) Plan Deferral Limit $22,500 $20,500 $19,500
Social Security Taxable Wage Base $160,200 $147,000 $142,800

Contact your Faegre Drinker benefits attorney with questions or for assistance with implementing the new retirement plan limits.


The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Mona Ghude

Mona Ghude helps corporate and private employers craft and administer benefits on behalf of diverse employee groups that make up today’s workforce. She advises on creating fair and financially sound defined contribution, defined benefit and equity-based plans and provides counsel on plan asset rules, deferred compensation and employee classification issues. Mona also provides counsel on the risks and value of benefit plans in corporate transactions and represents high-level executives in negotiating employment, change-of-control and severance agreements. View all posts by and

About Author: Mark Rosenfeld

An employee benefits lawyer, Mark Rosenfeld counsels employers, plan sponsors and administrators on the design, administration and governance of retirement plans (such as 401(k) plans) and welfare plans (such as health plans). He also drafts executive compensation arrangements, equity incentive plans and severance plans. Mark provides detailed analysis and advice on IRS Code § 280G golden parachute provisions in M&A transactions. View all posts by and

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