Retirement plan contribution limits are indexed for inflation, and with the recent announcement of significant a Social Security cost of living increase – which is typically a reflection of inflation – most of the retirement contribution limits have increased for 2022. A few limits that have remained unchanged include the amount to contribute to an IRA and the catch-up contribution amount.
|Type of limit||2022 limit|
|Elective deferrals to 401(k), 403(b), 457(b)(2)|
and 457(c)(1) plans
|Contributions to defined contribution plans||$61,000|
|Contributions to SIMPLEs||$14,000|
|Contributions to IRAs||$6,000|
|Catch-up contributions to 401(k), 403(b), 457(b)(2)|
and 457(c)(1) plans
|Catch-up contributions to SIMPLEs||$3,000|
|Catch-up contributions to IRAs||$1,000|
If you’re not already maxing out your contributions to other plans, you still have an opportunity to save more in 2022. And if you turn age 50 in 2022, you can begin to take advantage of catch-up contributions.
However, keep in mind that there are still additional factors that may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or eliminate your ability to make Roth IRA contributions or to make deductible traditional IRA contributions.
There is one item to keep in mind: pending legislation. The current draft of the Build Back Better Act has proposed limitations on some contributions and other retirement savings strategies, such as the so-called “backdoor Roth” and after tax 401(k) contributions.
We’ll keep you updated on any tax law changes as we learn about them. If you have questions about how much you can contribute to tax-advantaged retirement plans in 2022, check with us.
Written by: Erin Kidd, EA
Erin Kidd is the Special Projects Manager at Thompson Greenspon and has nearly a decade of tax experience specializing in individual taxation. Throughout her career, she has focused on simplifying complex tax issues and educating clients to maximize their tax benefits and plan for future events.
Erin holds a Bachelor’s and Master’s Degree in Business Administration from Morehead State University, is an Enrolled Agent, a federally licensed tax preparer who has unlimited rights to practice before the IRS, and an Accredited Financial Counselor ®. She has been recognized by the Garrison Commands of West Point, NY and Fort Leavenworth, KS for her contributions to the military community for her work with the installations’ Volunteer Income Tax Assistance Centers.
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