2022 Tax Information

As we reach the end of the year, a tax topic that will be discussed more will be the IRS 401(k) contribution limits. This contribution limit has a significant impact on your retirement savings and the strategies that are available to you. The 401(k) contribution limits for 2022 are as follows:

The above 401(k) limits can help determine if you are maximizing your retirement savings potential. This is because most companies have some sort of 401(k) match. Because of this, every employee’s priority should be to contribute up to the 2022 $20,500 limit through their salary deferrals as they receive free money from their employer for doing so. If you are over 50, you will want to take full advantage of the catch-up contributions as they are meant to help you ramp up your retirement savings as you get closer to your retirement date. The maximum IRS limit of $61,000 ($67,500 if over 50). This limit considers the funds the employee and employer put into a 401(k). Contributions up to this limit benefit the employee to store away even more for retirement even if they are not getting any company match on the funds. The contributions up to this IRS limit are also a very useful tool in that they can be eligible for Mega Backdoor Roth Conversions. To read more about how Mega Backdoor Roth Conversions work, please read our article discussing this topic in depth.

 * This is also the limit for 403(b) and 457 plans

 If you would like help navigating the best route for your specific situation related to your 401(k) plan and retirement, please feel free to reach out to us here at Rhame and Gorrell Wealth Management for a complimentary financial plan review. Our CPAs and CFP® professionals have years of experience and are happy to help answer any retirement questions you might have.