Let’s Talk… 401k Plan Changes!!

New year brings new limits to 401k plans. The max you can defer into a 401k is now $22,500 (up from $20,500). The catch up contribution if you are 50 & over also moves up from $6500 to $7500. 

Please keep in mind that this is your contribution which reduces taxable income so make your changes now because It takes a couple of pay cycles for the change to be reflected. Also note that your employer match is on top of this contribution. 

Another thing I’d like to bring up is look at different money market options as a place for cash in your 401k if you are market risk averse. There are some money market options that are exclusively invested in US treasuries at the time of this post paying just under 4pct. This would be for plans that allow you to pick your own investments in a 401k (Fidelity’s brokerage link is an example of this). Keep in mind you have reinvestment risk, but if it’s invested in US treasuries, your principal is very safe. This is quite a change from a year ago when money markets were paying negligible amounts of interest.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.