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Comp and Benefits Brief
Nov. 1, 2022
2023 Employee Benefit Plan Limits Announced by IRS
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)
| $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) – Healthcare – Employee Contribution | $3,050 | $2,850 | Yes |
Flexible Spending Account (FSA) – Healthcare – 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)
| $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.
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These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.