In response to inflation, the Treasury Department recently announced changes to retirement account savings for 2022. Below we’ll go over the contribution and income limits that will be affecting 401(k)s and Roth IRAs next year.

401(k)s

After two years stuck at $19,500, the annual contribution limit for employees who partake in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increasing to $20,500 for 2022. Keep in mind that although most employers send reminders to update your 401(k) election during open enrollment season, you can actually make changes any time during the year.

The catch-up contribution limit for these plans, eligible for employees age 50 and older, is staying the same at $6,500. It’s important to note that you qualify for catch-up contributions beginning the year you turn 50, so even if your 50^th birthday is at the end of 2022, you are still eligible to make the additional $6,500 catch-up contribution for the year.

The contribution limit for a SIMPLE IRA—a retirement plan designed for small businesses with 100 or fewer employees—jumps from $13,500 in 2021 to $14,000 in 2022. The catch-up limit for this plan remains the same at $3,000.

IRAs

The limit on annual contributions to an Individual Retirement Account (IRA) will remain at $6,000 next year. The catch-up contribution limit is not subject to inflation adjustments so it will also remain unchanged at $1,000. Keep in mind that 2021 IRA contributions can be made until April 15, 2022, and next year’s IRA contributions can be made until April 15, 2023.

When it comes to the good news with Roth IRAs in 2022, look to the income limits for making deductible contributions to a traditional IRA as well as any type of contribution to a Roth IRA. Both limits are increasing.

Here’s how these limits are changing for traditional IRAs in 2022:

• For single tax filers participating in a workplace retirement plan, the eligibility for full contribution limit will go up from $66,000 to $68,000. The phase-out limit will increase to $78,000, up from $76,000.
• For married joint filers who are personally covered by a workplace retirement plan, the income limit for full eligibility will increase from $105,000 to $109,000. The phase-out limit will increase from $125,000 to $129,000.
• For married joint filers whose spouse is covered by is a workplace retirement plan, the income limit for full eligibility is increasing to $204,000, up from $189,000. The phase out limit is increasing from $198,000 to $208,000.

Here’s how these limits are changing for Roth IRAs in 2022:

• Income eligibility for single tax filers and heads-of-household will increase from $125,000 to $129,000, and the phase-out limit will increase to $144,000, up from $140,000.
• Income eligibility for joint filers is increasing from $198,000 to $204,000 for full contributions. The phase-out limit is increasing from $208,000 to $214,000.