The Internal Revenue Service (IRS) announced new contribution limits for 2022. While some limits stayed the same there were some changes to note. We’ll go over some here but be sure to keep an eye out for our yearly Tax-at-a-Glance handout that is always handy to have.
Let’s start with what is staying the same. The limit for Traditional IRA and Roth IRA will remain at $6,000. The catch-up contribution will also remain at $1,000 for those individuals over the age of 50. These limits have stayed the same since 2019.
Some nice changes have been implemented for certain workplace retirement accounts.
Limits for 401(k), 403(b), most 457 plans and the federal governments Thrift Savings Plan will rise $1,000 to $20,500. Catch-up contributions remain at $6,500 for individuals over age 50.
The limit for SIMPLE IRA Plans also increases from $13,500 to $14,000. Similar to the other retirement plans the catch-up contribution will not change. For 2022 the catch-up contribution for a SIMPLE IRA will still be $3,000.
Another change is the income ranges for Traditional IRA deductions and Roth IRA contributions.
Traditional IRA deductions are gradually phased out depending on your income and filing status. The phase out range is $68,000 to $78,000 for a single person covered by a workplace retirement plan (up from $66,000 to $76,000 in 2021).
The phase out range is $109,000 to $129,000 for a married couple filing jointly if the spouse making the IRA contribution is covered by a workplace retirement plan (up from $105,000 to $125,000 in 2021), but for a married couple where the spouse contributing to an IRA is not covered by a workplace retirement plan and the other spouse is covered the range is $204,000 and $214,000 (up from $198,000 and $208,000 in 2021).
Not changing again is a married person filing a separate return who is covered by a workplace retirement plan, that range stays at $0 to $10,000.
Eligibility for Roth IRA contributions has increased. Contributions are phased out from $129,000 to $144,000 (up from $125,000 to $140,000 in 2021) for single filers and heads of households, and $204,000 to $214,000 (up from $198,000 to $208,000 in 2021) for those filing jointly as married couples. A married person filing separately was not adjusted and will stay at $0 to $10,000.
There are a number of changes that you may want to take advantage of and we would love to help guide you through that process. Schedule your call with us to get the ball rolling.