Individual workers can contribute up to $20,500 to their 401(k) retirement accounts in 2022, up from $19,500 in 2021 and 2020, the IRS announced this month.
The higher contribution limit also applies to other retirement accounts, including 403(b) plans, most 457 plans and the federal Thrift Savings Plan.
The change is part of the tax code’s annual inflation adjustments and doesn’t require Congress to act, according to The Wall Street Journal. The benefits of higher limits go mainly to the small fraction of wealthy people who are able to max out their contributions.
Just 8.5% of people putting money in defined-contribution accounts hit the maximum in 2018, according to a Congressional Research Service report, the Journal said.
Catch-up contributions to retirement accounts for those age 50 and up will remain unchanged at $6,500. Including their regular contributions, people 50 and up will be able to stash up to $27,000.
The contribution limit for individual retirement accounts (IRAs) will also stay the same at $6,000. That limit has not increased since 2019, according to CNBC.
