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What is the New 401k/403b Contribution Limit for 2022?

If you participate in an employer-sponsored retirement plan, you may be pleased to learn that you can save even more in 2022. The maximum amount you can contribute to a 401(k) plan will increase to $20,500 in 2022. This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Savings Plan.

If you’re age 50 or older, you can also make catch-up contributions of up to $6,500 to these plans in 2022 (unchanged from 2021). [Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.]

The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) will increase to $14,000 in 2022, and the catch-up limit for those age 50 or older remains $3,000.

If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($20,500 in 2022 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can save the full amount in each plan — a total of $41,000 in 2022 (plus any catch-up contributions).

The maximum amount that can be allocated to your account in a defined contribution plan [for example, a 401(k) plan or profit-sharing plan] in 2022 is $61,000 (up from $58,000 in 2021) plus age 50 or older catch-up contributions. This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.

Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2022 is $305,000 (up from $290,000 in 2021), and the dollar threshold for determining highly compensated employees (when 2022 is the look-back year) will increase to $135,000 (up from $130,000 in 2021).

WE’RE HERE TO HELP

If you have any questions about increasing your retirement plan contributions, please call or email us at (410) 823-5442 or [email protected]

Chesapeake Financial Advisors is a fee-only financial planning, investment advisory and tax planning firm with offices in Towson, Columbia, and Frederick, Maryland.

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https://www.peakeadvisors.com/site/wp-content/uploads/2019/05/Compliance-Social-Media-Disclaimer.pdf

Lauren

Lauren Dobzinski

Lauren started at Chesapeake Financial Advisors in the summer of 2019 as the Director of Client Engagement. Her focus is to help clients get started on their journey to financial peace of mind and to engage each new client through the process of securing their financial future. Lauren’s professional experience started seven years ago at ALTEK Information Technology as the firms’ National Account Manager, which included serving the nation’s largest healthcare insurance companies. She ran her own marketing and business development firm for a few years before starting at Chesapeake.

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