Great News for corporate and similar retirement plans as we get a 5% (actually 5.13%) bump in contribution limits…yay
Not sure what happened to the cost of living adjustments (COLA) for regular IRA’s, Roth’s and our catch up provisions as they are stuck once again at the same levels? Maybe they are only going to increase them every four years which puts an increase next year? Maybe they (IRS) does not want to confuse us? Either way, here are the updated rules from the IRS latest release for year 2022 !
The following from this IRS.GOV announcement and hot links are live back to the IRS website if you have deeper questions on each subject!
Deferral limits for 401(k) plans
The limit on employee elective deferrals (for traditional and safe harbor plans) is:
- $20,500 in 2022 ($19,500 in 2021 and 2020; and $19,000 in 2019), subject to cost-of-living adjustments
Catch-up contributions for those age 50 and over
If permitted by the 401(k) plan, participants age 50 or over at the end of the calendar year can also make catch-up contributions. You may contribute additional elective salary deferrals of:
- $6,500 in 2022, 2021 and 2020 and $6,000 in 2019 – 2015 to traditional and safe harbor 401(k) plans
Deferral limits for IRA Roth
For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can’t be more than:
- $6,000 ($7,000 if you’re age 50 or older), or
- If less, your taxable compensation for the year
Traditional IRAs
- Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
- No retirement plan at work: Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.
These charts show the income range in which your deduction may be disallowed if you or your spouse participates in a retirement plan at work:
2022
- IRA Deduction if You ARE Covered by a Retirement Plan at Work – 2022
- IRA Deduction if You Are NOT Covered by a Retirement Plan at Work – 2022 (deduction is limited only if your spouse IS covered by a retirement plan)
2021
- IRA Deduction if You ARE Covered by a Retirement Plan at Work – 2021
- IRA Deduction if You Are NOT Covered by a Retirement Plan at Work – 2021 (deduction is limited only if your spouse IS covered by a retirement plan)
Roth IRAs
This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.
| If your filing status is… | And your modified AGI is… | Then you can contribute… |
|---|---|---|
| married filing jointly or qualifying widow(er) | < $204,000 | up to the limit |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year | < $129,000 | up to the limit |
Have a Great “Year 2022 Retirement Limits Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.