401(k) contribution limits going up next year

The annual limit on contributions to a 401(k) is going up by $1,000 next year, the IRS announced Thursday.

The new limit, $20,500, is up from the current amount of $19,500 and applies to other defined-contribution plans as well, including 403(b)s, 457s and the federal Thrift Savings Plan.

The contribution limit for SIMPLE retirement accounts is also being hiked, to $14,000, up from the current annual amount of $13,500.

The IRS is also increasing the income ranges for eligibility to make deductible contributions to traditional and Roth IRAs as well as to claim the Savers Credit.

However, annual limits on contributions to individual retirement accounts are not budging next year. People will be able to put up to $6,000 into IRAs, plus an additional $1,000 in catch-up contributions if they are 50 or older, the IRS stated.

Catch-ups for 401(k)s, 403(b)s, 457s and the TSP are also staying the same, at $6,500, which means that people 50 or older can contribute a maximum of $27,000 into those accounts next year. The catch-up limit for SIMPLE plans is also staying the same, at $3,000.

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