You can contribute a bit more to your retirement plan in 2022.
The IRS announced Thursday that individuals can contribute $20,500 to their 401(k) plan in 2022, up from $19,500 for 2021 and 2020. The contribution limit also applies to other retirement plans, like 403(b)s, most 457 plans and the federal government's Thrift Savings Plan. The increase will be welcome news for the super savers who max out their accounts each year.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan remains unchanged at $6,500. That means most participants in these plans who are 50 and older can contribute up to $27,000, starting in 2022, the agency reported.
The announcement comes amid growing inflation concerns. Consumer prices jumped 0.4% in September, pushing them to 5.4% above where they were a year ago, the Labor Department reported earlier this month.
The limit on annual contributions to an individual retirement account (IRA) remains unchanged at $6,000, according to the IRS. And the IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000, the agency reported.
The income ranges for determining eligibility to make deductible contributions to traditional individual retirement accounts (IRAs) and to contribute to Roth IRAs increased for 2022 (taxpayers can deduct contributions to a traditional IRA if they meet certain conditions).