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Sizeable Increases to 2023 Plan Limits Due to Inflation

November 1, 2022

The Internal Revenue Service recently issued its annual cost-of-living adjustments (COLAs) for the 2023 tax year for retirement plans as well as health and welfare benefit plans. These COLAs reflect significant increases in the consumer price index (CPI). Plan sponsors should both alert their employees and prepare to allow such changes for the 2023 tax year.  

In Notice 2022-55, the IRS set forth COLAs for many retirement plan limits, including significantly increased contribution limits. Please see the table below for retirement plan cost of living adjustments:

Retirement Plan Limits 2023 2022
Deferral Limit $22,500 $20,500
Catch-up Contribution Limit $7,500  $6,500 
DC Annual Addition Limit $66,000  $61,000 
Annual Compensation Cap $330,000  $305,000 

Taxable Wage Base 



DB Annual Benefit Limit



457(b) Contribution Limit



HCE Threshold



SIMPLE 401(k) Limit



SIMPLE 401(k) Catch-up



Maximum ESOP Account Balance



ESOP 5-year Distribution Period Limit 



Key Employee Threshold






Previously, in Revenue Procedures 2022-24 and 2022-38, the IRS increased various limits applicable to health and welfare arrangements. Notably, the IRS increased Health Savings Account annual contribution limit to $3,850 for single individuals and $7,750 for families. 

Please see the chart below for other health and welfare plan COLAs:

Welfare Plan Limits  2023  2022

Health FSA Max



Dependent Care FSA Max



Adoption Credit Limit



HDHP Min Annual Deductible (Single)



HDHP Min Annual Deductible (Family)



HDHP Out of Pocket Max (Single)



HDHP Out of Pocket Max (Family)



HSA Max Contribution Limit (Single)



HSA Max Contribution Limit (Family) 



HSA Catch-Up Contribution Limit (Not Indexed)



TSA Parking and Mass Transit Monthly Limit



QSEHRA Reimbursement Limit (Single)



QSEHRA Reimbursement Limit (Family)



If you have any questions or require assistance administering these changes to your benefit plans, please contact the authors or your Miller Canfield attorney today.