The IRS has announced inflation-adjusted figures for retirement account savings for 2022 and I want to provide an update on popular retirement savings plans contribution limits.
Staying put for 2022 are traditional Individual Retirement Accounts (IRAs) and Roth IRA contributions with the limit remaining at $6,000 ($7,000 with a catch up contribution if you are age 50 or older).
For workplace retirement accounts (i.e. 401(k), 403(b), etc.), the contribution limit increases $1,000 to $20,500. The catch-up contribution limit for employees aged 50 and over who participate in these plans remained unchanged from the 2021 limit of $6,500. So if you are over the age of 50, you can contribute as much as $27,000 into your 401(k) or 403(b).
Eligibility for Roth IRA contributions has also increased. Contribution limits are based on your filing status and modified AGI (adjusted gross income):
- 2022 Roth IRA phase out limits
- Single: $129,000 - $144,000
- Married Filing Jointly: $204,000 - $214,000
- 2021 Roth IRA phase out limits
- Single: $125,000 - $140,000
- Married Filing Jointly: $198,000 - $208,000
It’s not too late to make a 2021 contribution! The deadline for IRA contributions (Roth, Traditional or SEP) for the 2021 tax year is Monday April 18, 2022 or the day you file your taxes, whichever comes first. Normally the tax deadline is April 15, but this year Emancipation Day will be celebrated that day so offices throughout Washington D.C. are closed. Taxpayers in Maine and Massachusetts have until April 19, 2022 because of the Patriots’ Day holiday in those states.
Lastly, a reminder about some retirement legislation changes put into place under the SECURE Act which was officially enacted on January 1, 2020!
- Required Minimum Distributions (RMD’s) start at age 72 not 70½.
- There is no age limit on contributing to a traditional IRA.
- Beneficiaries who inherit IRA’s are required to withdraw ALL assets of an inherited IRA account within 10 years(exceptions for spouses, minor children and heirs who are disabled or chronically ill). Previously, beneficiaries who inherited IRA’s were allowed to withdraw required minimum distributions for the span of their lives.
I hope you found this update timely and informative. If you want to set up a time to discuss your tax situation or savings plan, don't hesitate to call or email me. You can also schedule a phone call or Zoom meeting by clicking here.
This information is not intended to be a substitute for specific individualized tax advice. I suggest that you discuss your specific tax issues with a qualified tax advisor. Securities and Advisory services offered through LPL Financial. A registered investment advisor.