November 2022 Compliance News Article
PBGC 2023 Levels
Pension Benefit Guaranty Corporation (PBGC) announced the flat and variable rate premium amounts as well as maximum benefit levels for various purposes for 2023.
Flat and Variable-Rate Premiums
PBGC announced an increase to the flat and variable-rate premiums for plan years beginning in 2023. The table below highlights the change in rates from last year.
| Plan Type | Flat-Rate Premium | Variable-Rate Premium | ||
|---|---|---|---|---|
| 2022 | 2023 | 2022 | 2023 | |
| Single- Employer | $88 | $96 | $48* $598 Per Participant Cap |
$52* $652 Per Participant Cap |
| Multiemployer | $32 | $35 | Not Applicable | |
*per $1,000 of unfunded vested benefits
Maximum Benefit for 2023
PBGC increased the guaranteed maximum monthly benefit for participants in under-funded single-employer pension plans in 2023. Multiemployer plan maximum guarantees are calculated differently and are not based on an indexed amount.
Here is a table that compares 2022 and 2023 maximum monthly benefits for a 65-year-old in a single-employer plan.
| Payment Option | 2022 Maximum Benefit | 2023 Maximum Benefit |
|---|---|---|
| Straight Life | $6,204.55 | $6,750.00 |
| 401(k), 403(b), Governmental 457(b) Catch-up Limit | $6,500 | $7,500 |
| Joint and 50% Survivor* | $5,584.10 | $6,075.00 |
* Amounts must be adjusted if spouse is not the same age.
Present Value of Maximum Guarantee
When a defined benefit plan’s Adjusted Funding Target Attainment Percentage (AFTAP) is at least 60% but less than 80%, the plan generally must limit accelerated benefits, like lump sum distributions, to the lesser of:
- 50% of the payment that would be paid if the restriction did not apply, or
- The present value of the PBGC maximum guarantee
PBGC announced the present value of the maximum guarantee for 2023 is $1,067,191 for a 65-year-old individual. This is down from $1,189,022 in 2022. The maximum guarantee is adjusted for different ages. A complete table can be found at www.pbgc.gov.
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