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Understanding 401(k) contribution limits can be confusing and overwhelming for some. They are, however, essential to know. Below is a breakdown of important contribution limits that help employees determine whether their savings are on track or have an opportunity to catch up. The annual contribution limit is a great goal to keep in mind, and encourages individuals who are able to defer additional funds into retirement savings to take advantage of doing so.

  2022 2021 2020
Employee Contribution Limit $20,500 $19,500 $19,500
Employee Catch-Up Contribution
(For employees aged 50 and over)
$6,500 $6,500 $6,500
Total Contribution Maximum for Defined Contribution Plan $61,000 $58,000 $57,000
Annual Compensation Limit $305,000 $290,000 $285,000
Individual IRA Annual IRA Contribution $6,000 $6,000 $6,000
Individual IRA Catch-Up Contribution $1,000 $1,000 $1,000
Annual Maximum Benefit Under Defined Benefit Plan $245,000 $230,000 $230,000
Highly-Compensated Employee $135,000 $130,000 $130,000
Social Security Wage Base $147,000 $142,800 $137,700
Simple IRA $14,000 $13,500 $13,500
Simple IRA Catch-Up $3,000 $3,000 $3,000

 

2022 IRS TAX SAVERS CREDIT1

Certain employees may be able to take a tax credit for making eligible contributions to the company’s retirement plan. An employee can generally take the credit if they are:

  • Age 18 or older;
  • Not a full-time student; and
  • Not claimed as a dependent on another person’s return.

The amount of the credit is 50%, 20% or 10% of the employee’s retirement plan contributions up to $2,000 ($4,000 if married filing jointly), depending on their adjusted gross income that is reported on their Form 1040 or 1040A. The chart below shows the amount of the credit, depending on adjusted gross income and tax filing status.

How Much the Credit is Worth Married Filing Jointly Head of Household All Other
Tax-Filing Statuses
50% of your contribution AGI < $41,000 AGI < $30,750 AGI < $20,500
20% of your contribution $41,001 – $44,000 $30,751 – $33,000 $20,501 – $22,000
10% of your contribution $44,001 – $68,000 $33,001 – $51,000 $22,001 – $34,000
0% of your contribution more than $68,000 more than $51,000 more than $34,000


For more information, please visit the IRS site.

Questions? Call 800.399.2083 or email retirement@htlfrps.com.

1For your specific situation, please consult with your tax advisor.
Heartland Retirement Plan Services are offered through Dubuque Bank and Trust Company. The information provided herein is general in nature and is not intended to be nor should be construed as specific investment, legal or tax advice. The factual information has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Heartland Retirement Plan Services makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, it. Products offered through Heartland Retirement Plan Services are not FDIC insured, are not bank guaranteed and may lose value, unless otherwise noted.