Open enrollment is underway for millions of Americans right now. So naturally, you’ll probably have questions about your health care flexible spending accounts and 401(k) contributions.
The next year appears to be a good one for those looking to contribute more to these accounts, as the cap limits for your FSA and 401(k) are rising by decent margins.
Here’s what you need to know about the rising limits of each account.
What is the FSA limit for 2022? Is it increasing?
The annual contribution limit for your health care flexible spending accounts (health FSAs) is on the rise for 2022, according to the Society for Human Resource Management.
- Employees can now contribute $2,850 to their FSA, which is $100 more than the $2,750 cap in 2021.
- “But with open enrollment for the 2022 benefits year already under way at many organizations, the increase may have come too late for some employees to take advantage of it,” per the society.
That said, you can carry over a maximum of $570 for health FSA plans that allow for the carryover of unused amounts, according to the Internal Revenue Service. That’s a $20 increase from $550 in 2021.
Will employee 401(k) contributions rise in 2022?
Employee 401(k) contributions will hit $20,500 for 2022, which is a $1,000 increase from the $19,500 cap for 2020-2021, according to the society.
- Any participants who are 50 years old and up can contribute an additional $6,500, which is unchanged from 2021.
And the limit on total employer-plus-employee contributions to defined contribution plans will jump to $61,000 in 2022, which is an increase of $3,000 from $58,000 in 2021.
Experts still suggest employees embrace their 401(k) accounts as much as possible to create financial stability, according to Human Resource Executive.
- Catherine Golladay, head of Schwab Workplace Financial Services, told the organization that employers can “engage workers with education and drive awareness of benefits that can help them build financial security.”