You may have to adjust the maximum amount that you can put into your 401(k). You can contribute up to $20,000. This is an increase of $1,000 over 2021. A “catch up” contribution of $6,500 is available to the over-50 crowd, bringing it total to $27,000. These limitations do not include employer contributions.

But, IRS has a limit on the total contributions of employees and employers. That limit for 2022 is $61,000 and $67.500 for 50-year-old participants, which reflect the catch up amount.

There is an $14,000 contribution cap for simple 401(k), which may be offered by small businesses. There is a catch-up of $3,000. Solo 401(k) plans — used by the self-employed with no employees except perhaps a spouse — come with the same contribution limits as traditional 401(k) plans.

In the months ahead, your statements will show illustrations showing how much lifetime guaranteed income you might get if you annuitize your account. The Secure Act included this mandate to 401(k), and other workplace plans.

Jason Berkowitz (chief legal and regulatory affairs officer at the Insured Retirement Institute) stated that “the point is… to help participants determine whether they are on track to achieve their retirement goals.”

“So, you take that [balance]Berkowitz explained that this could be used to create an income stream in retirement.

Under an interim rule issued by the U.S. Department of Labor that’s now in effect — a final rule is expected relatively soon and it could be different — two illustrations would be provided at least once a year. The first would be an estimate of monthly income for a single-life annuity, which is monthly payments until the owner passes away; the second one would include income from a joint life annuity that includes benefits for the spouse who survives.

The monthly amounts shown would be based on a worker’s current account balance and assume the payments were to start immediately — and as if the person were age 67, or their actual age, if older.

However, for someone who is say 35 years of age, the contribution period will continue to grow. This illustration doesn’t show. It has been suggested that the numbers savedrs may see as deflating could occur if their savings are based on their past accumulations.

House Ways and Means Chairman Richard Neal, D-Mass., sent a letter to the Labor Department in late 2020 in response to the interim rule, asking that there be additional assumptions — i.e., investment returns — included in the information provided to 401(k) participants.

The final rule may not include this recommendation.

Craig Copeland is a Senior Research Associate at the Employee Benefits Research Institute. He stated that “pretty much everybody agrees it’s valuable information, but it’s how you present it that’s the problem.”

Although companies have been permitted to include annuities in their 401(k) plans, the Secure Act aimed to eliminate companies’ fear of legal liability if the annuity provider were to fail or otherwise not meet its obligations.

Employers, insurers, and asset managers are now moving to make these guaranteed lifetime income options easier accessible through 401 (k) plans, and other similar workplace plans.

But plan sponsors have not been quick to adopt the plans. The problem lies in workers’ ignorance of annuities and aversion towards the idea that they can transfer their retirement savings into one lump sum.

Copeland explained that “but people also claim they are interested to a guaranteed source income in retirement.” That makes it difficult.