IRS increases limits for 401(k) plans to $20,500 for 2022, leaves individual retirement accounts unchanged

Personal finance

MoMo Productions | DigitalVision | Getty Images

Workers may funnel more money into 401(k) plans next year, according to the latest cost-of-living adjustment from the IRS. 

The employee contribution limit for 401(k) plans is increasing to $20,500 in 2022, up from $19,500, and catch-up deposits for savers 50 and older will still be $6,500. The new amounts also apply to 403(b), most 457 and Thrift Savings Plans.

Despite rising inflation, the boost wasn’t extended to individual retirement accounts, limiting savings opportunities for the 33% of private industry workers without a workplace plan

The IRA limit for 2022 remains unchanged at $6,000 and hasn’t increased since 2019.

More from Personal Finance:
Last-minute House Democrat plan bumps state and local tax cap to $80,000 through 2030
Billionaires spared big IRA tax bill in latest Build Back Better plan
Democrats put 401(k) and IRA restrictions back into Build Back Better plan

However, more Americans may now qualify for Roth IRA contributions, with income phaseouts rising to $129,000 to $144,000 for single savers ($204,000 to $214,000 for couples filing together).

And there are higher income phaseouts to qualify for the retirement saver’s credit or those deducting IRA contributions.

The changes come as many Americans face retirement insecurity. Although many have savings shortfalls, only 8.5% of workers maxed out company retirement plans in 2018, according to a report from the Congressional Research Service.

Products You May Like

Articles You May Like

Don’t bank on free returns: 60% of retailers roll out stricter policies
Trump’s civil fraud trial in NY is set to start in October 2023
Top 6 Tax Changes You Should Know About for 2022
Phillips 66 (PSX) and Hertz Global (HTZ): 11/18/2022 Bull and Bear
Inflation boosts U.S. household spending by $433 a month, on average, Moody’s finds

Leave a Reply

Your email address will not be published. Required fields are marked *