2022 retirement contribution limits increase for Gen X business owners

6 months ago 237

Retirement contribution limits increase for 2022 

Employees will be able to save more in 2022 with the IRS increases to retirement plan contribution limits. You can defer an additional $1,000 through payroll deduction in 2022.  This means you can contribute up to $20,500.  One way to accelerate your path to financial independence is to make sure you are taking advantage of the tax-deferred contributions and compounding growth available through your retirement plan(s).   Which of these highlights fit for you?

2022 retirement contributions limits when you are 50

If your 50-year milestone birthday happens in 2022, you can take advantage of extra retirement savings.  You don’t have to wait for your birthday to contribute the additional $6,500 to your 401k, 403b, or 457 Plan.  If you’re eager to escape peak busyness, prioritizing these extra retirement savings can help you achieve your desired outcome sooner.

Click here for the full IRS announcement of 2022 retirement contribution limits

Retirement savings risk for highly compensated employees

If you’re a highly compensated employee (HCE) at your company, earning over $135,000 you may not have access to the full deferral limits every year if lower-paid workers at your company don’t participate. Be sure to contribute what you can as early as you can.  Delaying savings is a risk for many reasons, especially as you start to earn more.

There is some good news for midlife HCE’s who are behind in their savings. The catch-up provisions that allow those over age 50 to contribute an additional $6,500 per year are not subject to the HCE restrictions, so even if your regular contributions are limited, you can still contribute the full $6,500 catch-up amount.

Match retirement contributions with your personal financial plan

Reviewing your retirement plan, limits, and investment options is an integral part of aligning your financial life and your goals. Contributing up to the allowable limits may not always be the answer, but ensuring that you are contributing the right amount and in the right types of accounts for your situation will make a meaningful difference in your ability to retire when, and how, you envision.