This is more of a PSA than an actual blog post from me. However, the information is important and if you have not seen it somewhere else, I am happy you are reading it here. It’s time to adjust our deferral limits on various investment schemes. Mainly, your retirement workplace plans such as your 401(k). The amounts you can save and invest are increasing. Let’s dive in!
Let’s take a look at the new 401(k) and 403(b) employee deferral amounts. First of all, these are the amounts that you, the participant, can contribute to your plan. For 2022, that amount is now $20,500. The age 50 and over catch-up provision is still $6,500 as of this writing. That’s a whopping $27,000 you can save if you are age 50 or older. Between employee contributions, and employer contributions, that brings your annual potential maximum contribution to $61,000 for 2022 ($67,500 for age 50+).
Employee deferral contributions to 457(b) plans are also increasing to $20,500. However, the catch-up provisions are a little more complicated. There is the age 50 or older contribution of $6,500 but… 457(b) plans have unique catch-up deferrals. 457(b) plans may allow a special “last 3-year catch-up.” This catch-up allows you to defer in the three years before you reach the plan’s normal retirement age: twice the annual 457(b) limit ($20,500 x 2 = $41,000), or the annual 457(b) limit, plus amounts allowed in prior years that you didn’t contribute. If a governmental 457(b) plan allows both the age 50 catch-up and the 3-year catch-up, you can use the approach that allows for a larger deferral but not both. I told you it was complicated.
Right now, no change for the traditional or Roth IRA. Those contributions are still $6,000 (or $7,000 if age 50+). That is, if you are eligible.
SIMPLE IRA and SIMPLE 401(k) limits are increasing to $14.000 for 2022.
SEP IRA contribution limits increase to $61,000 for 2022.
Go forth and save more! As an independent CERTIFIED FINANCIAL PLANNER™, I can help you plan for the future and make progress toward your goals. Contact me and let’s get started. #talktometuesday #education #Hireaplanner #retirement #stressfree #lifeplan #savings #tax #ETF #funds #fund #CFPPro #2022 #contribution #401k #403b #457b