Stay Informed About IRS Deferral Limits

According to a recent survey, most Americans are uniformed about how much money they may defer to their 401(k) plan accounts annually without triggering tax repercussions.

As the Internal Revenue Service (IRS) explains, for employees who participate in a 401(k) plan, the elective deferral/contribution limit has increased from $20,500 in 2022 to $22,500 for the current plan year. The catch-up contribution limit for employees ages 50 and over increased to $7,500 from $6,500.

Even though the IRS tends to increase these limits by a small margin every year, few retirement savers in the United States are aware of the limit or actually set their deferrals to match it, according to researchers.