If saving more for retirement is one of your clients’ New Year’s resolutions for 2022, the table and links below will help plan for the 2022 contributions and help get your clients closer to meeting retirement-savings resolutions.
The Internal Revenue Service (IRS) has announced the 2022 cost-of-living adjustment (COLA) increases to contribution limits for Individual Retirement Accounts (IRAs) and qualified plans.
Each year, the IRS adjusts these numbers for cost-of-living increases in $500 increments when statutory thresholds are met. Although there were no changes to traditional and Roth IRAs, there was an increase for defined contribution limits with employer plans. In addition, the life expectancy tables used to calculate required minimum distributions (RMDs) also have been updated.
While discussing maximum contributions with clients for traditional or Roth IRAs, it’s important to understand the deductible IRA and Roth IRA phaseout ranges to avoid the 6% excess contributions penalty. The table below may help with planning contributions for 2022.
|IRA Contributions Limits||2021 Limits||2022 Limits||COLA Increases|
|Traditional and Roth IRA Contribution Limits||$6,000||$6,000||No change|
|Traditional and Roth IRA Catch-Up
Contributions (Ages 50 and Older)
|SIMPLE IRA Maximum Contributions||$13,500||$14,000||$500|
|SIMPLE IRA Catch-Up Contributions
(Ages 50 and Older)
|SEP-IRA Contribution Limit||$58,000||$61,000||$3,000|
|401(k), 403(b), and 457(b) Maximum
|401(k), 403(b), and 457(b) Catch-Up
Contributions (Ages 50 and Older)
|IRC 415 Defined Contribution Limits||$58,000||$61,000||$3,000|
|Qualified Longevity Annuity Contract
Here are some considerations on how to help clients meet their New Year’s resolutions to save more for retirement:
More information regarding COLA and phaseout ranges can be found in the 2022 Limitations Adjusted link below as provided in Section 415(d), etc. IRS notice. To help illustrate the maximum allowable contributions for traditional and Roth IRAs, refer to the “How Much Can I Contribute to an IRA?” calculator.
Good tax planning is a great first step for a bright 2022!
This material is provided for informational purposes only and should not be construed as investment, tax, or legal advice. Information is based on current laws, which are subject to change at any time. Clients should consult with their accounting or tax professionals for guidance regarding their specific financial situations.
This material is educational and intended for an audience with financial services knowledge.
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