The Internal Revenue Service (IRS) announced this month the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS today also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.
- Staying put for 2022 are traditional Individual Retirement Accounts (IRAs), with the limit remaining at $6,000. The catch-up contribution for traditional IRAs remains $1,000 as well.1
- For workplace retirement accounts (i.e. 401(k), 403(b), amongst others), the contribution limit rises $1,000 to $20,500. Catch-up contributions remain at $6,500.1
- Eligibility for Roth IRA contributions has increased, as well. These have bumped up to $129,000 to $144,000 for single filers and heads of households, and $204,000 to $214,000 for those filing jointly as married couples.1
- Another increase was for SIMPLE IRA Plans (SIMPLE is an acronym for Savings Incentive Match Plan for Employees), which increases from $13,500 to $14,000.1
For individuals who are age 50 and up can contribute a “catch-up contribution” to the retirement plans listed above in 2022 of $6,500, which has not increased from 2021. By adding the overall increase to the catch-up contribution, a 50-year-old (or older) participant can contribute up to $27,000 in 2022.
It’s important to pay attention to these changes so we can adjust your retirement account or advise you on your contributions to your workplace 401(k) program.
Ensuring you understand when you can stop working and that you’ll have the necessary streams of income to sustain your quality of life is the center of everything we do together. At Wehring Wealth Management, we identify your expenses, income, and goals for retirement, and assemble a plan to ensure any future financial decisions are made wisely. We adjust for inflation, cost of living, and how decisions you make today affect your plans for retirement tomorrow. Our goal is to help you make smart decisions with your money. Decisions that help you protect what you’ve worked hard for, take advantage of available perks, and keep you focused on the future you want.
You can read more in Notice 2021-61 PDF, posted by IRS.gov or contact our office here if you have any questions regarding the 2022 contribution changes.
1. CNBC.com, Friday, November 5, 2021
2. Forbes.com, Thursday, November 4, 2021