As a member of the National Association of Plan Advisors (NAPA), I received this article from them which explains the new (and past) limits for contributions and compensation for various individual and group retirement accounts and plans. The items relevant to self-directed solo 401(k) plans are emphasized.
"The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022. The 2022 limits are contained in Notice 2021-61, released Nov. 4. Most rates have increased; a few are unchanged.
The limits for 2022 are as follows.
The limitation under Code Section 402(g)(1) on the exclusion for elective deferrals described in Code Section 402(g)(3) is $20,500. The 2021 and 2021 levels were $19,500; the 2019 level was $19,000; the 2018 level was $18,500, and that for 2017 and 2016 was $18,000.
The limitation on deferrals under Code Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is $20,500 for 2022. The 2021 and 2020 levels were $19,500; the 2019, 2018 and 2017 levels were $19,000, $18,500 and $18,000, respectively.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction in 2022 is phased out if the couple’s income is between $204,000 and $214,000; the 2021 levers were $198,000 and $208,000; the 2020 levels were $196,000 and $206,000, respectively; those for 2019 levels were $193,000 and $203,000.
The AGI phase-out range for taxpayers making contributions to a Roth IRA in 2022 is $204,000 to $214,000 for married couples filing jointly; the 2021 range was $198,000 to $208,000; the 2020 range was $196,000 to $206,000, and that of 2019 was $193,000 to $203,000. For singles and heads of household, the income phase-out range is $129,000 to $144,000; the 2021 range was $125,000 to $140,000; the 2020 range was $124,000 to $139,000, and that of 2019 was $122,000 to $137,000.
The AGI limit for the Saver’s Credit (also known as the retirement savings contribution credit) under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is as follows:
$68,000 for married couples filing jointly; the 2021 level was $66,000; the 2020 level was $65,000, and that of 2019 was $64,000;
$51,000 for heads of household; the 2021 level was $49,500; the 2020 level was $48,750, and that of 2019 was $48,000; and
$34,000 for married individuals filing separately and for singles; the 2021 level was $33,000; the 2020 level was $32,500, and that for 2019 was $32,000.
The limitation on the annual benefit under a defined benefit plan under Code Section 415(b)(1)(A) is $245,000, the level for 2021 and 2020 was $230,000; those for 2019 and 2018 were $225,000 and $220,000, respectively, and that for 2017, 2016 and 2015 was $215,000. For a participant who separated from service before Jan. 1, 2022, the limitation for defined benefit plans under Code Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2021, by 1.0534.
The limitation for defined contribution plans under Code Section 415(c)(1)(A) is $61,000; the 2021 limit was $58,000; the 2020, 2019, 2018 and 2017 limits were $57,000, $56,000, $55,000 and $54,000, respectively.
The dollar amount under Code Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period is $1,230,000; the levels for 2021, 2020, 2019, 2018 and 2017 were $1,165,000, $1,150,000, $1,130,000, $1,105,000 and $1,080,000, respectively. The dollar amount used to determine the lengthening of the five-year distribution period is $245,000; the level for 2021 and 2020 was $230,000; the 2019, 2018 and 2017 levels were $225,000, $220,000 and $215,000, respectively.
The dollar limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is $200,000; the level for 2021 and 2020 was $185,000; the 2019 level was $180,000, and that for 2018 and 2017 was $175,000.
The limit for an individual making qualified retirement contributions for 2022 is $6,000, the level set for 2021, 2020 and 2019 was $6,000; that for 2018 and 2017 was $5,500.
The dollar limitation under Code Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan for 2022 is $6,500, the same level as 2021 and 2020; it was $6,500 for 2021 and 2020; it was $6,000 for 2019, 2018 and 2017. The dollar limitation under Code Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Code Section 401(k)(11) or Code Section 408(p) for individuals aged 50 or over for 2022 is $3,000, the same level as 2021, 2020, 2019, 2018 and 2017.
The limitation under Code Section 408(p)(2)(E) regarding SIMPLE retirement accounts for 2022 is $14,000, the level for 2021 and 2020 was $13,500; the 2019 level had been $13,000.
Compensation Limits
The annual compensation limit under Code Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is $305,000; the level for 2021 was $290,000; that of 2020, 2019, 2018 and 2017 had been $285,000, $280,000, $275,000 and $270,000, respectively.
The limitation used in the definition of a highly compensated employee under Code Section 414(q)(1)(B) for 2022 is $135,000; the level for 2021 and 2020 had been $130,000; it stood at $125,000 in 2019 and $120,000 for 2018 and 2017.
The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Code Section 401(a)(17) to be taken into account, for 2022 is $450,000; the level for 2021 was $430,000; the levels in 2020, 2019, 2018 and 2017 had been $425,000, $415,000, $405,000 and $400,000, respectively.
The compensation amount under Code Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) for 2022 is $650, the same as the 2021 level; it had been $600 for 2020, 2019 and 2018.
The compensation amount under Treas. Reg. §1.61 21(f)(5)(i) concerning the definition of “control employee” for fringe benefit valuation in 2022 is $120,000; the level for 2021 and 2020 was $115,000; it had been $110,000 for 2019 and 2018, and $105,000 in 2017. The compensation amount under Treas. Reg. §1.61 21(f)(5)(iii) for 2022 is $245,000; that for 2021 was $235,000; it stood at $230,000, $225,000, $220,000 and $215,000 in 2020, 2019, 2018 and 2017, respectively.
The limits, and Notice 2021-61, are available here."
In summary, for solo 401(k)s in 2022, the elective salary deferral limit increased by $1,000 to be $20,500. The overall limit (salary deferral + profit sharing) was increased by $3,000 to be $61,000. The catch-up contribution for those 50 and over remained the same at $6,500, so their overall contribution limit is $67,500.
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