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November 12, 2021

Annual Benefit Limit

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Definition

The annual benefit limit for defined benefit plans is the lesser of:

A) 100% of the participant’s average compensation for his or her highest 3 consecutive calendar years
B) The dollar limit that is in effect for the year

Year

2017

2016

2015

2014

2013

2012

2011

Limit

$215,000

$210,000

$210,000

$210,000

$205,000

$200,000

$195,000

2018

 2019  2020  2021 2022

$220,000

 $225,000  $230,000  $230,000 $245,000

Referring Cite

IRC § 415(b)(1)(A) and IRC § 415(c)(1)(A), Treas Reg §1.415(c)-1

Additional Helpful Information

  • Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions. Generally, you will need continuing professional help to have a defined benefit plan.
  • Forfeitures under a defined benefit plan cannot be used to increase the benefits any employee would otherwise receive under the plan. Forfeitures must be used instead to reduce employer contributions.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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