Effective January 1, 2022, the IRS is implementing some retirement contribution and benefits updates. Although there are a few key changes this year, we wanted to share highlights for your benefit.
Click here to compare this year and past years’ limits. The retirement limits that have changed include:
- The elective deferral limit for participants in 401(k) and 403(b) plans will increase to $20,500.
- The deferral limit for 457(b) plans of state and local governments and tax-exempt organizations will increase to $20,500.
- An IRA contributor who is not covered by a workplace retirement plan but is married to someone who is will have the deduction phased out if their combined income is between $204,000 and $214,000.
- The AGI phase-out range for married couples filing jointly making Roth IRA contributions is now $204,000 to $214,000, and $129,000 to $144,000 for singles and heads of households.
- The AGI limit for the Saver’s Credit is $68,000 for married couples filing jointly, $51,000 for heads of households, and $34,000 for married couples filing separately and singles.
- The limitation for defined contribution plans increased to $61,000.
- The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period increased to $1,230,000. The amount that determines the lengthening the five-year distribution period increased to $245,000.
The changes regarding compensation and cost-of-living limits include:
- The annual compensation limit increased to $305,000.
- The limit for defined contribution plans under 415(c)(1)(A) increased to $61,000.
- The annual compensation limit for eligible government participants increased to $450,000.
- The compensation amount for simplified employee pensions (SEPs) remains unchanged at $650.
- The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased to $1,230,000.
- The threshold to determine whether a multiemployer plan is systemically important increased to $1,220,000,000.
- The adjusted gross income limitation for determining the retirement savings contributions credit for all taxpayers increased to $20,500.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of households who are active participants in a qualified plan and have adjusted gross incomes between $68,000 and $78,000, increased from last year.
- The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing joint return or for taxpayers filing as a widower increased to $204,000.
- The adjusted gross income phase-out range for taxpayers making contributions to a Roth IRA is increased to $204,000 to $214,000 for married couples filing jointly.
For a comprehensive list of all limits for 2022, please visit https://www.irs.gov/pub/irs-drop/n-21-61.pdf.