SSA Press Release: Social Security Announces 8.7 Percent Benefit Increase for 2023 (Oct. 13, 2022)
Available at https://www.ssa.gov/news/press/releases/2022/#10-2022-2
The Social Security Administration (SSA) has announced the annual cost-of-living adjustment to the maximum amount of earnings subject to Social Security tax (i.e., the taxable wage base). For 2023, that amount will be $160,200 (up from $147,000 for 2022).
EBIA Comment: Some 401(k) plans that provide for profit-sharing contributions use the Social Security taxable wage base for their permitted-disparity allocation formulas. The taxable wage base also impacts certain fringe benefits and is relevant when determining the tax savings from a cafeteria plan. For more information, see EBIA’s 401(k) Plans manual at Section IX.C.3.b.iii (“Profit-Sharing Contributions-Permitted Disparity: Taking Social Security Contributions Into Account”). See also EBIA’s Cafeteria Plans manual at Sections III.D (“Advantages and Disadvantages of Cafeteria Plans for Employees”) and III.E (“Advantages and Disadvantages of Cafeteria Plans for Employers”), and EBIA’s Fringe Benefits manual at Section III.D (“Adoption Tax Credit Is Also Available: How It Works”).
Contributing Editors: EBIA Staff.