Projected limits?

I know that the IRS won't announce the new 415, etc., limits until at least late October.  However, in past years, @Tom Poje used to project the limits about now.  Given his retirement, is anyone else doing this?

Carol, I always print out yours! I was about to suggest your name and realized you were the poster . . .

The CPI-U for September is scheduled to be released tomorrow morning at 8:30am. I have a copy of Tom's file from days of yore and can provide the updated figures shortly after the release based on his file.

9 hours ago, ratherbereading said:

Carol, I always print out yours! I was about to suggest your name and realized you were the poster . . .

I update mine immediately when the IRS numbers come out.  But I always like to have the projected numbers when they are available, because the IRS has gotten later and later in releasing its numbers.  And with the pandemic, I expect it to be even later than usual this year.

Cost of living increase this year is only around  1.18%, so most plan limits will not increase in 2021.

The only expected increases for 2021 are:

DC limit   $58,000

Compensation limit   $290,000

The September 2020 CPI report will be issued by DOL early  tomorrow morning, which will "finalize" my projections, but I don't expect a large enough change (up or down) in the CPI-U index to affect any other limit.

.....   Jeff

3 minutes ago, John Feldt ERPA CPC QPA said:

The CPI-U for September is schedule to be released tomorrow morning at 8:30am. I have a copy of Tom's file from days of yore and can provide the updated figures shortly after the release based on his file.

That would be wonderful!  As usual, I'm happy to give credit (in this case, to you, your firm, and  him).  I just like to keep my site as useful as possible, and having the projected numbers helps a lot.

1 minute ago, Jeff Hartmann said:

Cost of living increase this year is only around  1.18%, so most plan limits will not increase in 2021.

The only expected increases for 2021 are:

DC limit   $58,000

Compensation limit   $290,000

 

The September 2020 CPI report will be issued by DOL early  tomorrow morning, which will "finalize" my projections, but I don't expect a large enough change (up or down) in the CPI-U index to affect any other limit.

 

.....   Jeff

 

Thanks for that information!  The IRS always takes weeks after the CPI-U is issued, and I expect it will be even worse this year with the pandemic.

Give credit to Tom. CPI-U for September was 260.280. Based on Tom's spreadsheet, the projections for 2021:

Increased:

Compensation Limit: $290,000 (was $285,000)

Annual Addition Limit: $58,000 (was $57,000)

Unchanged:

Deferral limit: $19,500

Catchup: $6,500

DB Limit: $230,000

Key Employee: $185,000

HCE: $130,000

Just for reference, the unrounded figures are:

Compensation Limit: $292,260

Annual Addition Limit: $58,452

Deferral limit: $19,792.50

Catchup: $6,597.50

DB Limit: $233,808

Key Employee: $189,969

HCE: $132,056

Taxable wage base for 2021 should be $142,800. https://www.ssa.gov/news/press/releases/2020/#10-2020-1

Thanks John!

The Social Security Administration has just announced that the COLA for 2021 is 1.3%. From that, the IRS can calculate what, if any, limits are increased for the 2021 plan year.

2 hours ago, John Feldt ERPA CPC QPA said:

Taxable wage base for 2021 should be $142,800. https://www.ssa.gov/news/press/releases/2020/#10-2020-1

Thanks, John!  All now posted at https://benefitsattorney.com/charts/maximums/

2 hours ago, rocknrolls2 said:

The Social Security Administration has just announced that the COLA for 2021 is 1.3%. From that, the IRS can calculate what, if any, limits are increased for the 2021 plan year.

Actually, IRS limits are based on CPI-U while Social Security increases are based on CPI-W.

Official figures: https://www.irs.gov/pub/irs-drop/n-20-79.pdf

13 minutes ago, John Feldt ERPA CPC QPA said:

Official figures: https://www.irs.gov/pub/irs-drop/n-20-79.pdf

Yep.  Chart at https://benefitsattorney.com/charts/maximums/, showing limits from 1996 through 2021, has been updated.

On 10/13/2020 at 1:50 PM, XTitan said:

Actually, IRS limits are based on CPI-U while Social Security increases are based on CPI-W.

Thanks for this, it gave me an excuse to go down the rabbit hole to look at why they are different and why limits are adjusted using different indices. 

I do love some history of the Bureau of Labor Statistics with my coffee...

I fired up Tom's COLA spreadsheet to see where we might be headed for 2022. Using the May 2021 CPI-U, which was 269.195, based on Tom's spreadsheet, and if we have exactly 0% inflation in the CPI-U from June 1, 2021 to September 30, 2021,

Perhaps the 2022 limits might be:

Deferral limit: $20,500 (2021 is $19,500)

Compensation Limit: $300,000 (2021 is $290,000)

DC Annual Addition Limit: $60,000 (2021 is $58,000)

DB Benefit Limit: $240,000 (2021 is $230,000)

Key Employee: $195,000 (2021 is $185,000)

HCE: $135,000 (2021 is $130,000)

Unchanged:

Catchup Limit: $6,500

I updated Tom's COLA spreadsheet with the actual July 2021 CPI-U, which is the first of the 3 CPI-U figures needed to determine the 2022 dollar limits. The July 2021 CPI-U was 273.003. Based on Tom's spreadsheet, assuming we have exactly 0% inflation in the CPI-U from August 1, 2021 through September 30, 2021, perhaps the 2022 limits might be:

Deferral limit: $20,500 (2021 is $19,500)

Compensation Limit: $305,000 (2021 is $290,000)

DC Annual Addition Limit: $61,000 (2021 is $58,000)

DB Benefit Limit: $245,000 (2021 is $230,000)

Key Employee: $195,000 (2021 is $185,000)

HCE: $135,000 (2021 is $130,000)

Unchanged:

Catchup Limit: $6,500

Has the comp limit ever gone up more than $5,000 in a year?

Going back to 2008 it went up $15k to 2009 from $230 to $245.  All other years since then it was $5k increases (with a few years of staying the same)

Quote

Has the comp limit ever gone up more than $5,000 in a year?

https://www.irs.gov/pub/irs-tege/cola_table.pdf

nice to see that even though I'm retired something of mine is still being used by some pension folks.

God bless, all!

Thanks Tom. Appreciate your comment above, and very much appreciate all your comments and support over the years here providing a good mix of levity and guidance.

Hey Carol, can you change the title of this post to remove the 2021? If not, that's okay, I'll just start another fresh post when the actual CPI-U for September gets released.

The CPI-U for August was published this morning at 273.567, giving us two of the three months needed to determine the 2022 limits. (July was 273.003). September will be published on October 13.

The sum of the three CPI-U's from last year, July through September of 2020, was 779.299, for an average of about 259.766. So we're looking at about a 5.24% increase if the 2021 September CPI-U is unchanged from August at 273.567.

If that holds, the limits posted above (August 22) should be the 2022 limits. The closest one to change next is the key employee compensation threshold, which should go up to $200,000 if the CPI-U for September is 273.897 or more. Again, all based on Tom's spreadsheet.

On 9/14/2021 at 4:51 PM, John Feldt ERPA CPC QPA said:

Hey Carol, can you change the title of this post to remove the 2021? If not, that's okay, I'll just start another fresh post when the actual CPI-U for September gets released.

Title has now been changed.  Thanks to you and @Tom Poje for all your work on this!

The CPI-U for September 2021 was published moments ago with a value of 274.310. Based on Tom Poje's spreadsheet, the dollar limits for 2022 are projected to be:

Increased:

Deferral limit: $20,500 (up from $19,500)

Compensation Limit: $305,000 (up from $290,000)

Annual Addition Limit: $61,000 (up from $58,000)

DB Limit: $245,000 (up from $230,000)

HCE: $135,000 (up from $130,000)

Key Employee: $200,000 (up from $185,000)

Unchanged:

Catchup: $6,500

Just for reference, the unrounded figures are:

Catchup: $6,949.50

Deferral limit: $20,848.50

Compensation Limit: $307,840

Annual Addition Limit: $61,568

DB Limit: $246,272

HCE: $139,104

Key Employee: $200,096

And the Social Security Taxable Wage Base for 2022 was actually released at ssa.gov to a nice even number: $147,000

The Bureau of Labor Statistics has announced that the city average for CPI-U from September 2020 to September 2021 is 5.4%. Now that we have the number that is the basis for figuring the IRS COLA adjustments for 2022, I will defer to the actuaries reading this to tell us what they believe the 2022 amounts will be. See the following link from the Bureau of Labor Statistics for the basis for this number.

https://www.bls.gov/news.release/cpi.t04.htm

1 hour ago, rocknrolls2 said:

The Bureau of Labor Statistics has announced that the city average for CPI-U from September 2020 to September 2021 is 5.4%. Now that we have the number that is the basis for figuring the IRS COLA adjustments for 2022, I will defer to the actuaries reading this to tell us what they believe the 2022 amounts will be. See the following link from the Bureau of Labor Statistics for the basis for this number.

https://www.bls.gov/news.release/cpi.t04.htm

John posted it this morning a few messages above yours.

Thanks, @John Feldt ERPA CPC QPA!  My chart of limits (which goes back to 1996, if you play with it enough!) has now been updated with the projections.

Now that the Bureau of Labor Statistics has announced that the CPI-U through September 2021 was 5.4%, has anyone plugged this in to arrive at a more accurate estimate of what the applicable 2022 amounts will be?

https://data.bls.gov/cgi-bin/surveymost

From the post in this Benefitslink thread above, on the previous page, from Wednesday:

The CPI-U for September 2021 was published with a value of 274.310. Based on Tom Poje's spreadsheet, the dollar limits for 2022 are projected to be:

Increased:

Deferral limit: $20,500 (up from $19,500)

Compensation Limit: $305,000 (up from $290,000)

Annual Addition Limit: $61,000 (up from $58,000)

DB Limit: $245,000 (up from $230,000)

HCE: $135,000 (up from $130,000)

Key Employee: $200,000 (up from $185,000)

Unchanged:

Catchup: $6,500

Just for reference, the unrounded figures are:

Catchup: $6,949.50

Deferral limit: $20,848.50

Compensation Limit: $307,840

Annual Addition Limit: $61,568

DB Limit: $246,272

HCE: $139,104

Key Employee: $200,096

Now that the basis the numbers for the COLA amounts have been released and we can accurately project them, what is keeping the IRS from making it official?

Official numbers are out. Results are what was expected. https://www.irs.gov/pub/irs-drop/n-21-61.pdf

Nice to know the spreadsheet still works. 🙂

Happy Veteran's Day.

God bless those who served and keep those protected who serve today.

Warming up this old thread and getting ready to fire up Tom's old spreadsheet next week Thursday.

The CPI-U for July 2022 was 296.276 and August was 296.171 (July and August of 2021 were 273.003 and 273.567). So we have two of the three months needed to determine the 2023 limits. September is scheduled to be published on October 13 at 8:30 A.M. Eastern Time.

The sum of the three CPI-U's from last year, July through September of 2021, was 820.880, for an average of about 273.627. So we're looking at about 8.25% as an increase if the 2022 September CPI-U is also 296.171 (unchanged from August).

Once the September CPI-U is released, the expected limits for 2023 will be posted here, all based on Tom's spreadsheet (not official limits).

Current ESTIMATED LIMITS, assuming the September CPI-U is the same as the August CPI-U, are:

Deferral limit: $22,500 (up from $20,500)

Catchup: $7,500 (up from $6,500)

Compensation Limit: $330,000 (up from $305,000)

Annual Addition Limit: $66,000 (up from $61,000)

DB Limit: $265,000 (up from $245,000)

HCE: $150,000 (up from $135,000)

Key Employee: $215,000 (up from $200,000)

Those are some big jumps.

pop in my head once and awhile. Nice to see my spreadsheet still gets used. ha. I contributed something to the pension world.

Soc sec will also jump sizably. Over 8.5%, for those of us that plan to start collecting within a year or so. Have almost taken out all of my pre-Roth 401k $, and no taxes.  one Roth was permitted I deferred everything there. I remember the arguments presented regular deferral vs Roth, and the conclusion leaned towards regular 401k was better because you would most likely be in a lower income tax bracket. but I don't recall any of the arguments saying your soc sec incomes becomes taxable if you have over a certain amount of income, but all of a sudden that kicks in and the so called advantage disappears, at least in my opinion.

anyway, as for me...in May 2021 my PSA count shot up to 16.6 (Anything below 4.0 is considered safe) MRI showed spots on the prostate, and the prognosis was probably cancerous. The doctor expected a "4", the biopsy came back a "1" which means everything is benign. The doctor simply shook his head and couldn't understand those results. Had a couple of priests lay hands on me before the biopsy, and  many prayers. Results of my annual physical today was PSA of 3.08. Didn't change my diet, didn't take any medication. No real explanation given for such a dramatic drop in the last 15 months. But I believe it was the prayer. God gave me a wonderful gift.

Hi Tom - whatever the reason, that's great news! Sincerely hope you continue healthy!

Tom, that is great to hear!  A wonderful gift indeed!

The CPI-U for September 2022 was published with a value of 296.808. Based on Tom Poje's spreadsheet, the dollar limits for 2023 are projected to be:

ALL Increased (NOT Official yet, of course):

Deferral limit: $22,500 (up from $20,500)

Catchup: $7,500 (up from $6,500)

Compensation Limit: $330,000 (up from $305,000)

Annual Addition Limit: $66,000 (up from $61,000)

DB Limit: $265,000 (up from $245,000)

HCE: $150,000 (up from $135,000)

Key Employee: $215,000 (up from $200,000)

Just for reference, the unrounded figures are:

Catchup: $7,528.50

Deferral limit: $22,586.50

Compensation Limit: $333,500

Annual Addition Limit: $66,700

DB Limit: $266,800

HCE: $150,688

Key Employee: $216,775

https://www.ssa.gov/news/press/releases/2022/#10-2022-2

And the taxable wage base for 2023 will be $160,200 (this number is official from the site above).

Thanks John!

Now that the September inflation measures are released, has anyone done the math on how the limit on a healthcare flexible spending account adjusts?

I saw a service provider’s earlier projection that this might increase from $2,850 to $3,050 for 2023. Is that still the right projection?

If you haven't seen Milliman's projections for 2024 yet, we've unearthed Tom's old spreadsheet to estimate the 2024 COLAs.

The CPI-U for July 2023 was 305.691 and August was 307.026 (July and August of 2022 were 296.276 and 296.171). We have two of the three months needed to determine the 2024 limits. September is scheduled to be published on Thursday, October 12 at 8:30 A.M. Eastern Time.

The sum of the three CPI-U's from last year, July through September of 2022, was 889.255, for an average of about 296.418, giving us an inflation increase last year of about 8.33%. This year we're looking at an increase of about 3.43% if the 2023 September CPI-U is also 307.026 (unchanged from August). This rate puts two limits just under the jumping up point: the Compensation Limit and the DC plan Annual Addition Limit. If inflation from August to September increases by a mere 0.065% for that one month interval (that's under 7 hundredths of one percent, or an annual rate of about 0.79%), then these limits both move a step up.

Once the September CPI-U is released, the expected limits for 2024 will be posted here, all based on Tom's spreadsheet (not official limits).

ESTIMATED LIMITS, based on September CPI-U equal to the August CPI-U, plus the possible step higher for the two limits as mentioned above:

Deferral limit: $23,000 (up from $22,500)

Catchup: $7,500 (unchanged)

Compensation Limit: $340,000 (up from $330,000), or possibly $345,000

Annual Addition Limit: $68,000 (up from $66,000), or possibly $69,000

DB Limit: $275,000 (up from $265,000)

HCE: $155,000 (up from $150,000)

Key Employee: $220,000 (up from $215,000)

Here are the unrounded figures for your reference, if the 2023 September CPI-U is equal to the 2023 August CPI-U:

These limits both get rounded down to the next lower $500 increment: Deferral: $23,360  and  Catchup: $7,786.50

This is rounded down to the next lower $1,000 increment: Annual Additions: $68,984

These are all rounded down to the next lower $5,000 increment:

Compensation: $344,920   DB: $275,936   HCE: $155,856  and  Key Employee: $224,198

my every once and a while peek in

nice to see the spreadsheet is still being used

at least I am remembered for something!

God has been very kind to me the past year.

still seem to be in good health. turned 66 last month and next month I put in my application for Soc Sec. what excitement, but I think my heart will hold out.

Don't miss the rat race, able to get up every morning and get over to church without having the worries of testing and forms and deadliness

God bless to all!

Have a great day!

8 minutes ago, Tom Poje said:

my every once and a while peek in

nice to see the spreadsheet is still being used

at least I am remembered for something!

 

God has been very kind to me the past year.

still seem to be in good health. turned 66 last month and next month I put in my application for Soc Sec. what excitement, but I think my heart will hold out.

Don't miss the rat race, able to get up every morning and get over to church without having the worries of testing and forms and deadliness

God bless to all!

Have a great day!

Nice to have you visit, Tom. Enjoy the time!

The CPI-U for September 2023 was published with a value of 307.789. Based on Tom Poje's spreadsheet, the dollar limits for 2024 are projected to be:

Almost all increased (NOT Official yet, of course):

Deferral limit: $23,000 (up from $22,500)

Catchup: $7,500 (unchanged)

Compensation Limit: $345,000 (up from $330,000)

Annual Addition Limit: $69,000 (up from $66,000)

DB Limit: $275,000 (up from $265,000)

HCE: $155,000 (up from $150,000)

Key Employee: $220,000 (up from $215,000)

Just for reference, the unrounded figures are:

Catchup: $7,793.00

Deferral limit: $23,379

Compensation Limit: $345,220

Annual Addition Limit: $69,044

DB Limit: $276,176

HCE: $155,984

Key Employee: $224,393

This thread is getting a little long, so I will start a fresh new one.

Beyond retirement and health plans, has anyone, perhaps a big accounting firm, done projections on the many tax and other figures that get inflation adjustments?

my calculations (though I don't remember if I included it on the spreadsheet) for SOC Sec

is a 3.2% increase and lo and behold the numbers match what I came up with using the formula

from https://www.narfe.org/federal-benefits-institute/cola/

There will be a 3.2 percent cost-of-living adjustment (COLA) for Civil Service Retirement System (CSRS) annuities, military retirement annuities and Social Security benefits; and a 2.2 percent COLA for Federal Employees Retirement System (FERS) annuities, applicable to payments provided in January 2024.  
 
Each year’s COLA is determined by comparing the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from year to year, based on the average of the third-quarter months of July, August and September. 

The CPI-W figure for September 2023 was 302.257, .33 percent higher than the average CPI-W for the third quarter of 2023, which was 301.236 (1982-84 = 100). The annual COLA is determined by comparing the change in the CPI-W from year to year, based on the average of the third-quarter months of July, August, and September.