What You Need to Know
- The amount that can be contributed to 401(k) plans in 2022 has increased to $20,500.
- Also boosted for 2022: The income ranges for determining eligibility to make deductible contributions to traditional and Roth IRAs.
- IRS also issued technical guidance regarding the cost-of-living adjustments.
The Internal Revenue Service announced Thursday that 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 limit on annual contributions to an IRA remains unchanged at $6,000. The IRA catch-up contribution limit for individuals aged 50 and older is not subject to an annual cost-of-living adjustment and remains $1,000, the IRS said.
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.
Thus, the IRS said, “participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $27,000, starting in 2022.”
The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans remains unchanged at $3,000.
Other Matters
The IRS on Thursday also issued technical guidance regarding all cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022 in Notice 2021-61.