Maximum contributions to IRAs is unchanged.
The Internal Revenue Service announced that workers will be able to set aside more money for their 401(k) plans in 2022. The employee contribution limit for 401(k) plans is increasing to $20,500 next year, a $1,000 increase from this year’s maximum of $19,500. The higher limit also applies to employees with 403(b), most 457 and Thrift savings plans, the IRS said. Other basic limits, such as the additional catch-up contribution of $6,500 for anyone over the age of 50, remain unchanged.
A Congressional Research Service report found that only about 8.5 percent of workers are funneling money into a contribution account at maximum levels. The increase is part of an annual cost-of-living adjustment that takes into account inflation. As a result, the change does not require legislative approval.
The IRS did not, however, increase the contribution maximums for IRAs, leaving that limit unchanged at $6,000 for 2022. That number has not changed since 2019.
Under the new changes, more Americans could qualify for Roth IRAs, which taxes contributions up front, allowing individuals to grow their investment earnings tax free, unless money is withdrawn before a person is 59.5 years old.
One in four Americans has no retirement savings, a new report revealed. Federal Reserve research suggests that the median retirement account balance in the U.S. was just $65,000 in 2019.
As the Lord Leads, Pray with Us…
- For officials in the IRS as they update policies and programs to meet the cost of living.
- For discernment for the president and his advisors as they promote their economic agenda.
- That more Americans would be able to save for retirement even in inflationary times.
Sources: IRS.gov, Market Watch, Fox News
