What is the maximum 401(k) contribution?
Everything you should know to help your employees save smarter this year.


Every year, the IRS updates the rules governing 401(k) and IRA contributions, and they recently announced the guidelines for 2022.
So what are the updates for 2022? Here’s the big news: The contribution limit for employer-sponsored 401(k) plans is $20,500 for individuals under age 50, up from $19,500. This is the first time the limit has gone up in two years!Now, let’s get into the details. In this article, we’ll discuss the new 2022 limits and rules—and how they may impact your retirement goals.
What you need to know about retirement plans (and their contribution rules)
As you may know, there are two primary retirement plans: employer-sponsored retirement plans and IRAs. Here’s how they differ:
Employer-sponsored plans—like 401(k), 403(b), and 457 plans—are only available if the employer offers one. If they’re eligible, individuals can contribute to both an employer-sponsored plan and an IRA.
IRAs are tax-deferred or tax-advantaged retirement accounts that individuals (who qualify) can open up on their own—regardless of their employment situation.
Because the IRS offers tax advantages to people who participate in these plans, there are naturally a few strings attached. Specifically, individuals can only contribute a certain amount of money in a given year—and that amount decreases if they earn above a certain threshold.
Good news—Most people can contribute more in 2022.
If your employees ask “what is the 401(k) limit for 2022?” you’ll be able to share the good news that most people can contribute up to $20,500 in 2022. This is up from $19,500, which was the limit in 2020 and 2021.
When you look at the following contribution limits, you’ll notice that some of them take into consideration taxable income, which impacts how much highly compensated employees and low-income earners can save. Estimating taxable income can be complicated, and since Betterment is not a tax advisor, we suggest talking with a qualified tax professional.
Let’s take a closer look at the 2022 contribution limits.
1. Employer-sponsored Plan Contribution Limits
In 2022, the limit on annual contributions to Roth or Traditional 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plans increases to $20,500. The additional catch-up contribution limit remains unchanged at $6,500 for a total contribution limit of $27,000 for employees 50 years old and older.
2. IRA Contribution Limits
In 2022, the limit on annual contributions to an IRA is unchanged at $6,000. The additional catch-up contribution limit for individuals 50 years old and over remains at $1,000. The total contribution limit is $7,000 for employees 50 years old and older.
Retirement Account Contribution Limits
Contribution Limits |
Catch-up Contribution Limit |
|||
Account Type |
2021 |
2022 |
2021 |
2022 |
Traditional IRA Roth IRA |
$6,000 |
$6,000 |
$1,000 |
$1,000 |
401(k) |
$19,500 |
$20,500 |
$6,500 |
$6,500 |
Income Limits for Deductible Traditional IRA Contributions
One of the best benefits of a Traditional IRA is that you can deduct contributions on your tax return. However, if you or your spouse are covered by an employer-sponsored retirement plan, Traditional IRA contributions are only deductible if your modified adjusted gross income (MAGI) falls below a certain threshold. Above that threshold, there’s a “phase-out” range in which an individual is eligible for a partial deduction, and after that range, contributions are not deductible.
Traditional IRA Deductibility Limits for Individuals with an Employer-sponsored Plan
2021 |
2022 |
||
Filing Status |
Income (MAGI) |
Income (MAGI) |
Deduction Limit |
Single individuals |
≤ $66,000 |
≤ $68,000 |
Full deduction up to the contribution limit |
$66,000 – $76,000 |
$68,000 – $78,000 |
Partial deduction |
|
≥ $76,000 |
≥ $78,000 |
No deduction |
|
Married, filing jointly |
≤ $105,000 |
≤ $109,000 |
Full deduction up to the contribution limit |
$105,000 – $125,000 |
$109,000 – $129,000 |
Partial deduction |
|
≥ $125,000 |
≥ $129,000 |
No deduction |
|
Married, filing separately |
< $10,000 |
< $10,000 |
Partial deduction |
≥ $10,000 |
≥ $10,000 |
No deduction |
Traditional IRA Deductibility Limits for Individuals without an Employer-sponsored Plan
2021 |
2022 |
||
Filing Status |
Income (MAGI) |
Income (MAGI) |
Deduction Limit |
Single individuals |
All incomes |
All incomes |
Full deduction up to the contribution limit |
Married, filing jointly + neither individual or spouse has an employer-sponsored plan |
All incomes |
All incomes |
Full deduction up to the contribution limit |
Married, filing jointly + spouse has an employer-sponsored plan |
≤ $198,000 |
≤ $204,000 |
Full deduction up to the contribution limit |
$198,000 – $208,000 |
$204,000 – $214,000 |
Partial deduction |
|
≥ $208,000 |
≥ $214,000 |
No deduction |
|
Married, filing separately
|
< $10,000 |
< $10,000 |
Partial deduction |
≥ $10,000 |
≥ $10,000 |
No deduction |
3. Income Limits for Roth IRA Contributions
To read more about the IRA deduction limits, refer to details available from the IRS.
Roth IRA contributions are not tax deductible. However, qualifying withdrawals (typically in retirement) can be made on a tax-free basis. However, to make the maximum $6,000 Roth IRA contribution, an individual’s income must fall below a certain threshold.
In 2022, eligibility to contribute to a Roth IRA starts to phase out at $129,000 for single filers and $204,000 for married couples (filing jointly). That’s a higher start of the phase out threshold than in 2021, which began at $125,000 for single individuals and $198,000 for married couples.
4. Income Ranges for Partial Roth IRA Eligibility
Individuals whose incomes fall within the following ranges are limited to making partial Roth IRA contributions. Those whose incomes fall below these ranges can contribute the full amount. Individuals with incomes above the range cannot contribute to a Roth IRA that year.
Income Tax Filing Status |
2021 MAGI |
2022 MAGI |
Single |
$125,000 – $140,000 |
$129,000 – $144,000 |
Married Filing Jointly |
$198,000 – $208,000 |
$204,000 – $214,000 |
If you are married and file separately and lived with your spouse at any point during the year, you will be completely phased out of making Roth IRA contributions if your MAGI is $10,000 or more.
For more information and guidance regarding Roth IRAs, review the expanded IRS rules.
Income Limits for the Retirement Savings Contributions Credit (Saver’s Credit)
To help low-income people save for retirement, the IRS offers the “Saver’s Credit.” Individuals may be eligible for the credit if they’re saving for retirement and their income falls below specific ranges. This credit offsets the individual’s income-tax liability; however, it phases out as the individual’s adjusted gross income (AGI) increases.