2022 457(b) Contribution Limit
For 2022, the 457(b) Contribution Limit figures are $20,500 (Deferral limit) and +$6,500 (Catch-up limit, age 50 and over).
Effective 2022-01-01Source: Notice 2021-61 (IRS)Verified 2026-09-04
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Deferral limit | $19,500 | $20,500 | +$1,000 (+5.1%) |
| Catch-up limit, age 50 and over | +$6,500 | +$6,500 | +$0 (+0.0%) |
Who it applies to
Employees participating in section 457(b) deferred compensation plans of state and local governments and tax-exempt organizations.
What changed this year, and why
Effective January 1, 2022, the base elective deferral limit under Internal Revenue Code section 457(b) increased to $20,500. This limit applies to deferred compensation plans maintained by state and local governments and tax-exempt organizations.
Common questions
- Who does the section 457(b) deferral limit apply to?
- Employees of state and local governments and tax-exempt organizations who participate in a section 457(b) deferred compensation plan.
- Does the deferral limit include catch-up contributions?
- No. The base deferral limit is separate from any catch-up contributions. Employees aged 50 or over may also be eligible for an additional catch-up deferral under a different provision of the Code, and employees within three years of normal retirement age may qualify for a different catch-up. Those amounts are not part of the base limit.
Your limit is the lesser of the dollar cap and your includible compensation
For 2022, the basic dollar cap on deferrals to a section 457 plan is $20,500. However, you cannot defer more than your includible compensation for the year, so the actual ceiling is the lesser of the two amounts. Includible compensation is generally your Form W-2 wages plus any elective deferrals you have already made. This rule applies to employees of state or local governments and tax-exempt organizations who participate in a section 457 deferred compensation plan. If your includible compensation is below $20,500, that lower figure is your maximum deferral for the year. The rule operates independently of other plan limits, although deferrals under a section 501(c)(18) plan count toward the overall $20,500 limit and may reduce what you can defer under a 457 plan.
Limit for deferrals under section 457 plans. If you're a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt or- ganizations), you should have deferred no more than the lesser of your includible compensation or $20,500 in 2022.
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
The special catch-up in the last 3 years before normal retirement age
During the last few years before you reach the plan's normal retirement age, your plan may offer a special higher deferral ceiling. If it does, the maximum you can defer is the lesser of two amounts: the first is twice the standard annual limit, which equals $41,000 for 2022; the second is the basic annual limit plus any portion of the basic limit you did not use in earlier years. The second option is only permitted if you are not also using the age 50-or-over catch-up. This catch-up window covers any or all of those final years before normal retirement age. Because the two tests are alternatives and the plan must specifically provide for this increased limit, not every participant will qualify or be able to use the full $41,000 figure.
Increased limit. During any, or all, of the last 3 years ending before you reach normal re- tirement age under the plan, your plan may pro- vide that your limit is the lesser of: 1. Twice the annual limit ($41,000 for 2022), or 2. The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50-or-over catch-up contributions).
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
The age 50 catch-up, and who can use it
If you are age 50 or older by the end of the year, a governmental section 457 plan can let you defer additional amounts beyond the standard limit. You qualify when no other elective deferrals can be made for you to the plan for the year because of other limits or restrictions. When you qualify, your ceiling becomes the lesser of your includible compensation or $20,500, plus an extra $6,500. This age-50 catch-up is distinct from the pre-retirement catch-up; if you are also close to the plan's normal retirement age and the plan provides the increased limit, that higher amount may take precedence over the $6,500 add-on.
Catch-up contributions. You can gener- ally have additional elective deferrals made to your governmental section 457 plan if: • You reached age 50 by the end of the year, and • No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. If you qualify, your limit can be the lesser of your includible compensation or $20,500, plus $6,500.
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
There is no form to file - your employer reports it on your W-2
There is no separate form you file with the IRS to report your 457(b) elective deferrals. Instead, your employer handles the reporting. Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. This means the deferral appears on the W-2 you receive from your employer, and you use those figures when preparing your individual tax return. You do not file a standalone form to disclose how much you deferred into the plan for the year.
Reporting by employer. Your employer gen- erally shouldn't include elective deferrals in your wages in box 1 of Form W-2. Instead, your em- ployer should mark the Retirement plan check- box in box 13 and show the total amount defer- red in box 12.
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
The 3-year catch-up lets you use limit you did not use in earlier years
During any or all of the last three years ending before you reach normal retirement age under a governmental section 457(b) plan, the plan may provide an increased deferral limit. Your limit under this special catch-up is the lesser of: (1) twice the annual limit ($41,000 for 2022), or (2) the basic annual limit plus the amount of the basic limit not used in prior years. This means you can make up for deferral room you did not use in earlier years, but only up to double the regular $20,500 limit. This provision is sometimes called the 3-year catch-up because it applies during the three years immediately before your normal retirement age under the plan.
During any, or all, of the last 3 years ending before you reach normal re- tirement age under the plan, your plan may pro- vide that your limit is the lesser of: 1. Twice the annual limit ($41,000 for 2022), or 2. The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50-or-over catch-up contributions).
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
Leave the excess in the plan and it is taxed twice
If you defer more than the $20,500 limit into a 457(b) plan in 2022, the excess must be withdrawn by April 15 of the year after the deferral was made. If you participate in more than one plan, the excess can be pulled from any plan that permits these distributions, but you must notify each plan of the amount to be paid from that plan by the date that plan requires. The plan must pay out the excess deferral along with any income that amount earned during the holding period. Missing this April 15 deadline has a lasting tax consequence: the excess remains in the plan and cannot be counted as investment cost, so it is included in your income when first deferred and taxed again when eventually distributed, resulting in double taxation on the same dollars.
Excess not distributed. If you don't take out the excess amount, you can't include it in the cost of the contract even though you inclu- ded it in your income. Therefore, you're taxed twice on the excess deferral left in the plan—
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
A 457(b) limit does not share room with a 401(k) or 403(b)
IRS Publication 525 groups elective deferral plans into two sets for the annual limit. The first three plan types on its list - a section 401(k) plan, the Thrift Savings Plan, and a salary reduction SEP - share one combined limit. A section 457 plan is the seventh type on that same list, grouped instead with a SIMPLE plan, a section 403(b) plan, and a section 501(c)(18)(D) plan, each of which the publication says has its own specific plan limit rather than a share of the first group's combined figure. Because the publication treats a section 457 plan's limit as one of these separate, specific plan limits rather than folding it into the combined figure for the first group, a worker who defers into both a section 401(k) plan and a governmental section 457 plan in the same year is measured against two separately stated limits rather than one shared figure split between the two accounts. The same separation holds between a section 457 plan and a section 403(b) plan, since a section 403(b) plan is also one of the specific-limit plan types rather than part of the combined group.
of contributions to the plans listed in (1) through (3), earlier, unless you are 50 or older. The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later.
Publication 525 (2022), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2021-61 (IRS)
- Deferral limit
The limitation on deferrals under section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $19,500 to $20,500.
- Catch-up limit, age 50 and over
The dollar limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over remains unchanged at $6,500.