New 401(k) limits
The most popular ways Americans can save up for their senior years are through workplace retirement plans like 401(k) accounts. If you have one, it’s a very opportunely way to put some money aside for your later years.
You choose a certain percentage out of each paycheck to put into an account tax-free and invest in a few options. Once you’ve retired, you take the funds in distributions, paying taxes on it as regular income at that moment.
There are limits, however, to how much money you’re allowed to put aside per year. The limit is adjusted yearly. In 2022, that limit was $20,500. And for 2023, you’ll get a tax cut, so that will go up to $22,500.
Also, those who are 50 years old and older can make catch-up contributions over the total. In 2022 that amount was $6,500. In 2023 it’ll be $7,500, indicating that those who are 50 and older can contribute a sum of $30,000.
