On November 10, 2021, the IRS issued Notice 2021-61 which provided annual cost-of-living adjusted limits for qualified retirement plans (see table below). Concurrently, they issued guidance in the form of Frequently Asked Questions (FAQs) to address certain pandemic-related issues concerning workforce shortages and retired individuals.
|401(k), 403(b), Profit-Sharing Plans, etc.||2022||2021|
|Defined Contribution Limits||61,000||58,000|
|Defined Benefit Limits||245,000||230,000|
|457 Elective Deferrals||20,500||19,500|
|Control Employee (compensation-based)||
|Taxable Wage Base||
Pension Plan FAQs
- FAQ #1: If a qualified pension plan does not provide for in-service distributions and the plan sponsor rehires a previously retired individual due to unforeseen hiring needs related to the COVID-19 pandemic, will the rehire cause that individual’s prior retirement to no longer be considered a bona fide retirement?
- The IRS indicated that, generally, the answer is no. As long as the Plan’s provisions do not define a “bona fide retirement” in a way that prevents the rehire of the retiree, the individual’s reemployment would not cause the prior retirement to fail be meet the “bona fide” definition.
- FAQ #2:May a qualified pension plan permit individuals who are working to commence in-service distributions.
- The IRS indicated that the answer is yes. As long as the individual has attained either age 59 ½ or the Plan’s normal retirement age (as defined), the plan may generally allow individuals to commence such “in-service distributions”.
More information on the FAQs can be found on the IRS’ website using the following link: Coronavirus-related relief for retirement plans and IRAs questions and answers | Internal Revenue Service (irs.gov)
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