Dive Brief:
- The Internal Revenue Service increased the amount individuals can contribute to their 401(k) plans for 2022, the agency announced Nov. 4. Individuals may now contribute a maximum of $20,500 — a $1,000 increase from the 2020 and 2021 cap.
- The IRS also increased income ranges that determine eligibility to make deductible contributions to IRAs, to contribute to Roth IRAs and to claim the Saver's Credit.
- The limit on yearly contributions to IRAs remains at $6,000, the IRS said.
Dive Insight:
Employers are demonstrating an increased interest in the financial health of their workers. But the push for employees to contribute to their retirement savings has been difficult, and the pandemic didn't change that.
In July, a group of household names including Chipotle, Chobani, Prudential Financial and Verizon joined an initiative led by Just Capital and Paypal that seeks to make worker financial well-being a stronger priority among executives and investors. The groups' interests appear to mirror those of employers at large; in 2020, a Bank of America report found that nearly two-thirds of employers said they feel "extremely" responsible for workers' finances.
Employers' concerns aren't unfounded. A 2020 survey from Betterment for Business found that a third of millennials and Gen Zers had made an early withdrawal from their retirement accounts. Nearly a quarter said they have used retirement money for expenses like travel and leisure activities.
Employers intent on providing employees the opportunity to better their money management should examine their current finance-related benefits and consider adding new ones, two benefits professionals wrote in an HR Dive opinion. The authors also highlighted the importance of communication; "messaging that's tailored to specific employee segments will gain the most traction," they wrote.
