Planning for your retirement is pivotal in taking a hold of your financial future. It also means staying up to date with any new considerations for your tax-advantaged plans. The IRS recently announced new annual contribution limits for the 2022 tax year. Let’s take a look at some key contribution information for the 2022 tax year.
Before we start, don’t forget that it’s not too late to contribute for 2021! Log into the Client Portal and click “Contributions” on the left side of the screen.
Increased Contribution Limits
SEP IRA – SEP IRA holders may contribute 25% of their compensation or $61,000 in 2022, whichever is less, whereas the previous 2021 limit was only $58,000. Furthermore, in calculating compensation for the purpose of this limit, up to $305,000 of compensation needs to be considered versus $290,000 in 2021.
Solo 401(k) – Solo 401(k) participants may contribute up to $61,000 in 2022, up from $58,000 in 2021. The $6,500 catch-up contribution for account holders age 50 or older still applies each year.
Health Savings Account (HSA) – HSA holders with single high-deductible health coverage may contribute $3,650 in 2022, an increase from $3,600 in 2021. Those with family coverage may contribute up to $7,300 in 2022 ($7,100 in 2020). $1,000 catch-up contributions for HSA holders age 55 or older still apply for each year.
SIMPLE IRA – This limit has increased for 2022: contributions cannot exceed $14,000 per year, up from $13,500 from 2021. However, as with SEP IRAs, up to $305,000 in compensation may be considered in determining a 2022 SIMPLE IRA contribution limit (as opposed to $290,000 in 2021).
Traditional and Roth IRA – These contribution limits will remain $6,000 in 2022. The $1,000 catch-up contribution for account holders age 50 or older will remain in effect as well.
Modified Adjusted Gross Income
The tax deductibility of Traditional IRA contributions and the ability to contribute to a Roth IRA may be affected by your modified adjusted gross income (MAGI) and by how you file your taxes.
Click here for IRS information about how MAGI may affect Traditional IRA contributions since the limit was increased for 2022. If you are covered by a retirement plan at work, your deductions for contributions to a traditional IRA is reduced depending on your filing status as an individual or married couple as well as how much you earn in a year.
Click here for IRS information about how MAGI may affect Roth IRA contributions since the limit was increased for 2022 as well. Your contribution limit is reduced depending on your filing status as an individual or married couple as well as how much you earn in a year.
Ready to Make a Contribution?
You have until April 18, 2022—the tax filing deadline—to make 2021 contributions. You can even make 2021 and 2022 contributions at the same time! Log in to the Client Portal and click “Contributions” on the left side of the screen to get started.
Don’t hesitate to give us a call at 877-742-1270 or send us a message through the Client Portal if you have questions or concerns.