This is the second consecutive year that the agency has raised the limit.
The IRS has announced that it will increase the maximum contribution limit for 401(k), 403(b), and most 457 retirement savings plans to $20,500 in 2022
Additionally, the catch-up contribution limit for those aged 50 and over will increase to $6,500 in 2022, up from $6,000 in 2021. The increase in contribution limits is designed to encourage more Americans to save for retirement. The Internal Revenue Service ( IRS ) adjusts the contribution limits each year to account for inflation and other economic factors. The agency also announced that there would be no changes to the income limits for traditional IRA deductions, Roth IRA contributions, and the Saver’s Credit in 2022.
The contribution limit for SIMPLE retirement accounts will remain the same at $13,500 in 2022. The maximum contribution limit for defined contribution plans, such as SEP IRAs and solo 401(k)s, will increase to $61,000 in 2022, up from $58,000 in 2021.
The IRS advises taxpayers to take advantage of the increased contribution limits to maximize their retirement savings
Individuals who participate in employer-sponsored retirement plans can contact their human resources department to increase their contributions for 2022.
In summary, the IRS has increased the maximum contribution limit for 401(k), 403(b), and most 457 retirement savings plans to $20,500 in 2022, up from $19,500 in 2021. The catch-up contribution limit for those aged 50 and over will also increase to $6,500 in 2022.
The contribution limit for SIMPLE retirement accounts will remain the same at $13,500, while the maximum contribution limit for defined contribution plans will increase to $61,000 in 2022. The IRS encourages taxpayers to take advantage of these increased contribution limits to maximize their retirement savings.
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