The IRS recently announced various adjustments to retirement plan and annual gifting limitations.
For those of you who are currently working, now you can contribute a little more to your employee retirement plan in 2022. For those of you who were born in 1972, congratulations on reaching the age where you can make “catch-up” contributions to your retirement plan for the first time! Ideally, you would make this change effective immediately on January 1, 2022.
According to the IRS’ announcement, IRA contribution limits for 2022 will remain the same as those in 2021 and the income tax brackets have also been adjusted. The IRS makes these changes to protect all of us from paying higher taxes simply due to inflation.
The details are listed in the table below.
|Maximum 401(k), 403(b), government TSP annual elective deferrals for employees under the age of 50||$20,500||$19,500|
|Catch-Up contribution for 401(k), 403(b), government TSP for employees who are 50 or older on 12/31/2022||$6,500||$6,500|
|Maximum contribution to SEP IRAs – the lesser of 25% of self-employment earnings or amounts shown to the right||$61,000||$58,000|
|Income under which single/joint tax payers may make full Roth IRA contributions (must have earned income)||$129,000/|
|Income under which single/joint tax payers covered by a retirement plan at work may make fully deductible traditional IRA contributions||$68,000/|
|Maximum Roth IRA and Traditional IRA contributions (for those whose income are below the limits)||$6,000||$6,000|
|Catch-Up IRA contribution for taxpayers who are 50 or older on 12/31/2022 (for those whose income are below the limits)||$1,000||$1,000|
|Standard Deduction for single/joint taxpayers||$12,950/|
|Annual Gift Exclusion||$16,000||$15,000|
|Maximum income allowed to qualify for 0% Capital Gains Tax Rates for single/joint taxpayers||$41,675/|
|Lifetime Estate Tax Exemption per person/couple||$12.06M/|
*Changes are in bold.
Should you have any questions, please reach out to your financial advisor.