With the cost of basically everything going up right now, this should be welcome news for people who have retirement accounts.
The Internal Revenue Service (IRS) on Thursday announced new contribution limits for 401(k) plans in 2022, along with updated guidance regarding cost of living adjustments (CODA) that affect various other retirement-related plans.
Here’s a rundown of what’s new:
- 401(k) plans: Individuals will be able to contribute up to $20,500 in 2020, an increase of $1,000 from $19,500 this year.
- 403(b), 457 plans: Ditto for most of these plans. The contribution limit goes up to $20,500 in 2022.
- IRAs: The income range that determines if you’re eligible to make deductible contributions to your Individual Retirement Arrangements will increase. For a full list of specific “phase-out” ranges, visit the IRS announcement here.
- Roth IRAs: The income range for contributing to your Roth IRA or the Saver’s Credit is also going up. Full list of phase-out ranges here.
- SIMPLE retirement accounts: The contribution limit for these accounts is increasing to $14,000 in 2022, up from $13,500.
What hasn’t changed:
- According to the IRS, annual contributions to IRAs remain capped at $6,000.
- Ditto for the “catch-up” contribution limit for people 50 and older, which remains unchanged at $1,000.
- 401(k), 403(b), most 457 plans: The catch-up contribution limits for these types of accounts are not changing.
To learn more about these changes in detail, check out the IRS Notice 2021-61.