IRS Provides New Benefit Plan Limits for 2023

Posted on January 25, 2023 by - News

Google+0
LinkedIn0

The IRS recently announced benefit plan limit changes for 2023. Many employee benefits are subject to annual dollar limits which are adjusted for inflation each year. However, due to decades-high inflation, many limits were increased more than usual for 2023. Common plans affected are health savings accounts (HSAs), high deductible health plans (HDHPs), and 401(k) plans. Below we illustrate common limits and how they are affected in the coming year. Be certain to review your company’s benefit plan limits and adjust as needed.

All limits are yearly unless indicated otherwise.

HSA Contribution

Limit 2023 2022 Change
Self-only $3,850 $3,650 ↑ $200
Family $7,750 $7,300 ↑ $450
Catch-up Contribution $1,000 $1,000 none

 

HDHP Definition

Limit 2023 2022 Change
Minimum deductible, self-only $1,500 $1,400 ↑ $100
Minimum deductible, family $3,000 $2,800 ↑ $200
Maximum out of pocket, self-only $7,500 $7,050 ↑ $450
Maximum out of pocket, family $15,000 $14,100 ↑ $900

 

Health Flexible Spending Account (FSA)

Limit 2023 2022 Change
Employee pre-tax contributions $3,050 $2,850 ↑ $200
Carryover $610 $570 ↑ $40
Dependent care tax exclusion $5,000 ($2,500 if married and filing taxes separately) $5,000 ($2,500 if married and filing taxes separately) none

 

Transportation Fringe Benefits (Monthly Limits)

Limit 2023 2022 Change
Transit pass and vanpooling combined $300 $280 ↑ $20
Parking $300 $280 ↑ $20

 

401(k) Contributions

Limit 2023 2022 Change
Employee elective deferrals, pre-tax $22,500 $20,500 ↑ $2,000
Catch-up contributions, over age 50, SIMPLE plans $3,500 $3,000 ↑ $500
Catch-up contributions, over age 50, other plans $7,500 $6,500 ↑ $1,000
SIMPLE contribution limit $15,500 $14,000 ↑ $1,500
Annual contribution limit $66,000 $61,000 ↑ $5,000
  • Elective deferral limit: the maximum amount able to be contributed to a retirement plan pre-tax.
  • Annual contribution limit: the maximum amount able to be contributed to a retirement plan.

 

Adoption Assistance

Limit 2023 2022 Change
Tax exclusion $15,950 $14,890 ↑ $1,060

 

Plan Limits

Limit 2023 2022 Change
Annual benefit limit $265,000 $245,000 ↑ $20,000
Annual compensation limit $330,000 $305,000 ↑ $25,000
Key employee compensation minimum $215,000 $200,000 ↑ $15,000
Highly compensated employee minimum $150,000 $135,000 ↑ $15,000
  • Annual benefit limit: maximum benefit able to be paid to an employee.
  • Annual compensation limit: maximum benefit able to be considered in calculating contribution allocations
  • Key employee compensation minimum: compensation level for determining key employee status for top-heavy plan testing.
  • Highly compensated employee minimum: compensation level for determining highly compensated employee status for nondiscrimination testing.

Questions on employee benefits insurance? Contact your Bankers Insurance agent. Not a client of ours? Let us earn your business! Each client is assigned a personal agent in our office, given their email address, and provided a phone number that rings right on their desk.

original article: IRS Provides New Benefit Plan Limits for 2023 (bankersinsurance.net)