The Good, the Bad and the Not so Pretty
The Announcement
The IRS has announced its annual retirement contribution and benefits limits for 2022, and it’s a mostly positive picture for future retirees.
401(k)s and Beyond
If you have a 401(k), 457 or 403(b), you are in luck (and that’s most of you!); the limit has been raised by $1000 to $20,500. Furthermore for workers with SIMPLE accounts, otherwise known as the savings incentive match plan for employees, their limits are now $14,000 up from $13,500.
Traditional and Roth IRAs
Unfortunately for those with a Roth or Traditional IRA, who’ve been patiently waiting for an increase since 2019, the limit remains at $6000. No change either to the over-50’s IRA catch-up contributions.
Phase-Out Ranges
The announcement also includes new phase-out ranges for Traditional IRA contributors whose deductions are phased out as their income goes above a certain amount. The ranges are as follows:
- $68,000 to $78,000
- $109,000 to $129,000
- $204,000 and $214,000
A lot of these deductions depend on your marital status and if you’re filing as a household. The one range that stays the same are employees who earn $10,000 or less. This is because, under section 415(d), it is not subject to the annual cost of living adjustment.
Further Increases
There were other increases across the board. The limitations for ‘highly compensated employees’ are to go up by $5,000, to $135,000. In addition to this, the annual benefit to a DB or defined benefit plan will also be increased, to $245,000; up from $230,000.
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