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. 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. 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. Write to me at forbes@juliejason.com. Include your city and state, and mention that you are a forbes.com reader. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future post. To keep up with topics that I cover, be sure to follow me on the forbes.com site.
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I want to know exactly how many savers are in the position to benefit from the catch-up allowance that aren't already set for retirement. I just can't see somebody with an awesome job, 'waking-up at 50', realizing that they haven't saved enough for retirement only to start plowing over $25k into a plan.
This just seems like something designed for the top one percent who don't need it anyway. Who is making these ridiculous rules.
I just read another article that says there are new requirements for retirement plans to include with every statement an 'earned annuity amount' even if the plan is a not annuity! What sense does that make? There will be a section that is going to show how much your payout would be if you started drawing immediately. Now seriously, that is only going to deter a young saver. Most plans show what your income will look like at retirement age given growth over time and with sustained contributions.