2022 is HERE

Nicole Mongeon, CFP® |
Categories
Financial Planning
Taxes
Nicole Mongeon CFP®

While in some ways it may feel like we are living 2020… part II, the 2022 year brings fresh snow along with fresh IRS limitations for retirement plan savings.  Certainly not the most thrilling topic on the planet, but increasing your 401(k) contributions and funding Individual Retirement Accounts (IRAs) are a big part of saving towards your retirement.  Act now to spread your increased contributions throughout the year, starting your 2022 off right!

 

Retirement Plans

The increased annual contribution limit for 401(k), 403(b), TSP, and most 457 plans is $20,500.  Over 50? You can contribute an additional $6,500 per year for a total of $27,000.

 

IRAs

Annual Roth and Traditional IRA Contributions are limited to a combined $6,000 ($7,000 if you're over 50) but are also subject to phase outs based on your Modified Adjusted Gross Income (MAGI):

 

Roth IRA

 

  • Single taxpayers: between $129,000 and $144,000

  • Married, filing joint couples: between $204,000 and $214,000

  • Married, filing separately: up to $10,000

 

Traditional IRA

 

  • Single taxpayers: between $68,000 and $78,000 (if covered by a workplace retirement plan)

  • Married, filing joint couples: between $109,000 and $129,000 (this applies when the spouse making the IRA contribution is covered by a workplace retirement plan)

  • Married, filing jointly couples: between $204,000 and $214,000 (this applies when the spouse making the IRA contribution is NOT covered by a workplace retirement plan, but the other spouse is covered by a workplace retirement plan)

  • Married, filing separately couples: up to $10,000

 

Phase-outs sound confusing? Not sure if you will reach the income limits for contributing? Set up monthly savings to fund the full $6,000 to a nonqualified account and wait until filing season next year - once you know your MAGI, you can move the allowable amount over to the IRA before filing.  You have until April 15th, 2023 to complete your 2022 contribution, giving you plenty of time to plan ahead.  

 

2022 brought many other changes, including increases in:

 

  •   Standard deductions

  •   Income thresholds for long-term capital gains

  •   The Alternative Minimum Tax exemption amount

  •   Annual gift exclusion ($16,000 in 2022, vs $15,000 in 2021)

  •   Health Savings Account (HSA) contribution limits:

    •   $3,650 for individuals in 2022, vs $3,600 in 2021 

    •   $7,300 for family plans in 2022, vs $7,200 in 2021

    •   55 or older? You can save an extra $1,000 to your HSA

  •   Flexible Spending Account (FSA) contribution limits ($2,850 in 2022 vs $2,750 in 2021) and FSA carryover limits ($570 in 2022 vs $550 in 2021)

 

In sum, taxes can be daunting. We encourage you to consult a tax professional to make sure you are maximizing every opportunity available.  A quality accountant will ask questions about everything above and more, so make sure you’ve hired the right professional for you!

 

References:

IRS News Release IR-2021-216, IRS Revenue Procedure 2021-45

 

SSB Wealth Management, Inc., d/b/a Rembert Pendleton Jackson (“RPJ”) offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”).  SEC registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the firm has attained a particular level of skill or ability.  You should carefully read and review all information provided by RPJ, including Form ADV Part 1A, Part 2A brochure and all supplements, and Form CRS. The information contained herein does not constitute investment advice or a recommendation for you to purchase or sell any specific security.  You are solely responsible for reviewing the content and for any actions you take or choose not to take based on your review of such content.
This information is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. You should not treat these materials as advice in relation to legal, taxation, or investment matters.
Certain information contained herein was derived from third party sources as indicated.  While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any information presented.  RPJ has not and will not independently verify this information.  Where such sources include opinions and projections, such opinions and projections should be ascribed only to the applicable third party source and not to RPJ.