IRS Announces Increases
Good news for participants in 401(k), 403(b) and most 457 plans and the federal government’s Thrift Savings Plan. Next year contribution limits will increase by an additional $1,000 … making annual deductible contributions capped at $20,500.
Limits on contributions to traditional and Roth IRAs remains unchanged at $6,000. Note: There are conditions that must be met for contributions to traditional IRAs to be tax deductible.
If neither the taxpayer nor their spouse is covered by a retirement plan at work, their full contribution to a traditional IRA is deductible. If the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated. The amount of the deduction depends on the taxpayer's filing status and their income.
Traditional IRA income phase-out ranges for 2022 are:
• $68,000 to $78,000 - Single taxpayers covered by a workplace retirement plan
• $109,000 to $129,000 - Married couples filing jointly. This applies when the spouse making the IRA contribution is covered by a workplace retirement plan.
• $204,000 to $214,000 - A taxpayer not covered by a workplace retirement plan married to someone who's covered.
• $0 to $10,000 – Married filing a separate return. This applies to taxpayers covered by a workplace retirement plan
Similarly, there are phase-out ranges of income in 2022 for Roth IRAs and Saver’s Credit participants.
Roth IRA contributions income phase-out ranges for 2022 are:
• $129,000 to $144,000 - Single taxpayers and heads of household
• $204,000 to $214,000 - Married, filing jointly
• $0 to $10,000 - Married, filing separately
Saver’s Credit income phase-out ranges for 2022 are:
• $41,000 to $68,000 – Married, filing jointly.
• $30,750 to $51,000 – Head of household.
• $20,500 to $34,000 – Singles and married individuals filing separately.
The agency also announced cost of living adjustments that may affect pension plan and other retirement-related savings next year. No details have been released as of this writing.
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