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Comp and Benefits Brief

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Nov. 1, 2022

2023 Employee Benefit Plan Limits Announced by IRS

By Geoffrey Fay

The IRS has released the 2023 cost-of-living adjustments for limits on employee benefits with some adjustments to the 2023 rates including minor increases to the maximum contributions allowed under Code Section 415 for defined contribution plans (e.g. 401(k)), maximum compensation used in determining benefits, and the taxable wage base.  Below is an updated chart on the 2023 limits.

 

Limits for 2023 – Qualified Plans

Limitation

2023

2022

Change?

Elective Deferrals (401(k) and 403(b)) Pre-Tax Contributions; 457(b), 402(g)(3))

$22,500

$20,500

Yes

Catch-Up Contributions – 401(k), 403(b), 457(b), SARSEP Plans

$7,500

$6,500

Yes

Highly Compensated Employee (HCE) – 414(q)

$150,000

$135,000

Yes

Annual Compensation Limit – 401(a)(17), 404(l), 408(k)(3)(C), 408(k)(6)(D)(ii)

$330,000

$305,000

Yes

Key Employee – 416(i)(1)(A)(i), Top-Heavy and 409A Specified Employee

$215,000

$200,000

Yes

Defined Contribution Plan – Total Annual Contributions – 415(c)

$66,000

$61,000

Yes

Defined Benefit Plan – Maximum Benefit – 415(b)

$265,000

$245,000

Yes

ESOP – Determining the Length of the General Five-Year Distribution Period

$265,000

$245,000

Yes

ESOP – Maximum Account Balance subject to Five-Year Distribution Period

$1,330,000

$1,230,000

Yes

 

Limits for 2023 – Tax Withholding Rates

Limitation

2023

2022

Change?

Taxable Wage Base

$160,200

$147,000

Yes

 

Limits for 2023 – High Deductible Plans, Health Savings Account and FSAs

Limitation

2023

2022

Change?

High Deductible Health Plan – IRS Limits (Self/Family)

  • Annual Deductible – Minimum
  • Out-of-Pocket Expenses (HSA) – Maximum

$1,500/$3,000

$7,500/$15,000

$1,400/$2,800

$7,050/$14,100

Yes

Yes

HSA Contribution Limit (Individual/Family)

$3,850/$7,750

$3,650/$7,300

Yes

HSA Contribution Catch-Up Limit

$1,000

$1,000

No

Flexible Spending Account (FSA) – Health Care – Employee Contribution

$3,050

$2,850

Yes

Flexible Spending Account (FSA) – Health Care – Maximum Carryover

$610

$570

Yes

Flexible Spending Account (FSA) – Dependent Care – Employee Contribution

$5,000

$5,000

No

Out-of-Pocket Expenses (ACA) – PHSA §2707(b) Maximum (in-network Essential Health Benefits for Non-Grandfathered Plans)

  • Self Only
  • Embedded Individual Max within Family Coverage
  • Family

$9,100

$9,100

$18,200

$8,700

$8,700

$17,400

Yes

Yes

Yes

 

Limits for 2023 – Affordable Care Act

Limitation

2023

2022

Change?

ACA Affordability Safe-Harbor

9.12%

9.61%

Yes

 

Limits for 2023 – Qualified Transportation Fringe Benefit

Limitation

2023

2022

Change?

Transit Pass, Van Pool

$300

$280

Yes

Qualified Parking

$300

$280

Yes

 

Penalties for 2023 – Affordable Care Act

Penalty

2023

2022

Change?

No Offer of Coverage

$2,880

$2,750

Yes

Offer of Coverage Lacks Minimum Value or Affordability

$4,320

$4,120

Yes

 

PBGC Premiums for Defined Benefit Pension Plans – 2023

Premium

2023

2022

Change?

Flat Rate (Per Participant)

$96

$88

Yes

Variable Rate for $1,000 of Unfunded Vested Benefits

$52

$48

Yes

Per Participant Variable Cap

$652

$598

Yes

 

Nelson Mullins Executive Compensation and Employee Benefits attorneys are ready to assist with your compensation and benefits related matters in a cost-effective and responsive manner.  Please contact one of our Executive Compensation and Employee Benefits partners or the Nelson Mullins attorney with whom you work.