IRS Announces Higher 2022 Retirement Account Contribution Limits For 401(k)s, Not IRAs

Inflation means you can—and probably should—contribute more to your workplace retirement account in 2022.

The Treasury Department has announced inflation-adjusted figures for retirement account savings for 2022. While contribution limits are up for workplace plans, contribution limits for Individual Retirement Accounts are stuck at 2019 levels.

“The real question is whether people pay attention to this,” says Terry Briggs, an employee benefits lawyer with Bowditch & Dewey in Worcester, Massachusetts. “To the extent you can afford it, you should contribute to the max.” That’s true for older workers trying to catch up with retirement savings. But it’s also true for younger workers. “It’s the length of time you have this money in your retirement plan before you take it out that’s important. Compounding interest really makes a difference,” Briggs says.

The basic salary deferral amount for 401(k) and similar workplace plans will jump $1,000 to $20,500, and the catch-up amount if you’re 50 or older stays flat at $6,500. The overall limit, which includes employer contributions, goes up $3,000—from $58,000 in 2021 to $61,000 in 2022. With catchups on top, that comes to $67,500. That helps workers whose employers allow special aftertax salary deferrals, and self-employed folks who can save to the limit in solo or individual 401(k)s or SEP retirement plans.