All key Internal Revenue Code (IRC) limits for qualified retirement plans will rise by unprecedented amounts from 2022 to 2023, Mercer projects. The 2023 limits will reflect increases in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of 2021 to the third quarter of 2022. Using this measure, inflation is projected to reach its highest level since indexing began, causing 7%–11% increases for most limits, based on their rounding levels. In addition, the non-SIMPLE plan catch-up limit — which has a large rounding threshold — will jump more than 15%. These record hikes come on the heels of 2021’s increases, which were the second highest ever at that time.
Mercer’s estimates are determined using the tax code’s cost-of-living adjustment and rounding methods, the CPI-U through June, and estimated CPI-U values for July, August, and September. Figures can’t be finalized until after September CPI-U values are published in October. IRS usually announces official limits for the coming year in late October or early November.