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IRS Raises 5 Retirement Contribution Limits for 2022

Many savers hoping to have the ability to sock away more cash in retirement accounts in 2022 than they may in 2021 are in luck.

Most contribution limits for frequent office retirement accounts and particular person retirement accounts (IRAs) are topic to inflation changes, also referred to as cost-of-living changes. And for the 2022 tax 12 months, a number of are rising, the IRS introduced Nov. 4.

Moreover, earnings limits for IRAs are rising.

All of those modifications will have an effect on your tax return that’s due by April 2023.

Contribution limits

Base limits for 5 office plans rise

For 2022, the bottom contribution restrict for the next kinds of office retirement accounts is rising from $19,500 to $20,500:

  • 401(ok) plans
  • 403(b) plans
  • Most 457 plans
  • Thrift Financial savings Plan

Moreover, the bottom contribution restrict for Financial savings Incentive Match Plan for Staff (SIMPLE) retirement accounts is rising from $13,500 to $14,000.

Catch-up limits for office plans unchanged

Annually, of us who’re 50 or older can save more cash of their tax-sheltered retirement accounts by additionally making additional contributions, generally known as “catch-up contributions.”

For 2022, the catch-up contribution restrict for the next kinds of office retirement accounts stays $6,500, the identical because it has been since 2020:

  • 401(ok)
  • 403(b)
  • Most 457 plans
  • Thrift Financial savings Plan

Which means somebody who’s at the very least 50 years outdated can contribute $20,500 plus $6,500 to these kinds of accounts — for a complete of $27,000 — in 2022.

Right here’s the Common Retirement Age in Your State

The catch-up contribution restrict for SIMPLE retirement accounts stays $3,000, the identical because it has been since 2015.

Base restrict for IRAs unchanged

The bottom contribution restrict for Roth and conventional IRAs stays the identical because it has been since 2019: $6,000.

Catch-up restrict for IRAs unchanged

The catch-up contribution restrict for Roth and conventional IRAs additionally stays the identical: $1,000.

The IRS notes that it’s because the catch-up restrict for IRAs isn’t topic to cost-of-living changes, not like varied different kinds of retirement accounts.

Revenue limits

Roth IRAs

Revenue limits for Roth IRAs decide whether or not you’re eligible to contribute to such an account in any respect.

The earnings phase-out ranges for Roth IRA contributions will enhance as follows for 2022:

  • Single tax-filing standing: $129,000 to $144,000 — up from $125,000 to $140,000
  • Head of family tax-filing standing: $129,000 to $144,000 — up from $125,000 to $140,000
  • Married couple submitting a joint return: $204,000 to $214,000 — up from $198,000 to $208,000
  • Married couple submitting separate returns: $0 to $10,000 — unchanged (as a result of it’s not topic to cost-of-living changes)

Which means, for instance, a single taxpayer who earns lower than $129,000 in 2022 can contribute to a Roth IRA as much as the total restrict — $6,000 or $7,000, relying on the taxpayer’s age. However a single taxpayer who earns $129,000 to $144,000 can contribute solely a decreased quantity. A single taxpayer who earns greater than $144,000 can not contribute to a Roth IRA.

Conventional IRAs

Revenue limits for conventional IRAs decide whether or not you can also make tax-deductible contributions to such an account.

These limits rely not solely in your tax-filing standing and earnings but additionally on whether or not you or your partner is roofed by a office retirement account. For specifics, see the bullet factors within the IRS’ (*5*).

Questioning how else conventional and Roth IRAs differ? Take a look at “Which Is Higher — a Conventional or Roth Retirement Plan?“

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