By Julie Jason, originally posted on Forbes.com.
If you “love” your 401(k) plan at work, you’ll be pleased with today’s IRS announcement about contribution limits. The amount that you can contribute to your 401(k) will be higher in 2022, increasing to $20,500 from 2021’s limit of $19,500.
This new limit also applies to 403(b) plans, most 457 plans and Thrift Savings Plans. The IRS defines 403(b) plans as being for “certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers,” while 457 plans are deferred-compensation retirement plans available for government and non-government employers.
Thrift Savings Plans are retirement and savings plans for federal employees and those in the uniformed services.
Catching Up On Contributions
Note that people who are age 50 and up can contribute a “catch-up contribution” to the retirement plans listed above in 2022 of $6,500, which has not increased from 2021.
By adding the overall increase to the catch-up contribution, a 50-year-old (or older) participant can contribute up to $27,000 in 2022.
More details can be found in Notice 2021-61, which is available at IRS.gov.
The Best 401(k) Savers
Who loves his or her 401(k)? People who take full advantage of their company’s 401(k) plan to save for retirement, which includes contributing enough to receive the company’s full matching contributions. They also are willing to share with others the advantages of saving as much as they can for retirement as early as they can, to take advantage of the compounding effect of time.
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