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Posted on December 16, 2021

2022 helpful cost-of-living tax changes announced

Good news! This coming year, taxpayers can put an extra $1,000 into their 401(k) plans. According to Teipen CPA Group Mike Poynter, the IRS recently announced that the 2022 contribution limit for 401(k) plans will increase to $20,500.

Believe it or not, there’s more helpful-to-your-bottom-line cost-of-living adjustments coming in 2022, including:

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500.
  • Limits on contributions to traditional and Roth IRAs remains unchanged at $6,000.
  • Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If neither the taxpayer nor their spouse is covered by a retirement plan at work, their full contribution to a traditional IRA is deductible. If the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated. The amount of the deduction depends on the taxpayer’s filing status and their income.

Here’s the fine print on Traditional IRA income phase-out ranges:

  • $68,000 to $78,000 – Single taxpayers covered by a workplace retirement plan
  • $109,000 to $129,000 – Married couples filing jointly. This applies when the spouse making the IRA contribution is covered by a workplace retirement plan.
  • $204,000 to $214,000 – A taxpayer not covered by a workplace retirement plan married to someone who’s covered.
  • $0 to $10,000 – Married filing a separate return. This applies to taxpayers covered by a workplace retirement plan

Roth IRA contributions income phase-out ranges for 2022 are:

  •  $129,000 to $144,000 – Single taxpayers and heads of household
  •  $204,000 to $214,000 – Married, filing jointly
  •  $0 to $10,000 – Married, filing separately

Saver’s Credit income phase-out ranges for 2022 are:

  • $41,000 to $68,000 – Married, filing jointly.
  • $30,750 to $51,000 – Head of household.
  • $20,500 to $34,000 – Singles and married individuals filing separately.

Contributions to SIMPLE retirement accounts also increases to $14,000 in 2022.

The way we look at it is – that every time you can save for the future counts toward easing your life in retirement — whether that’s around the corner or 30 years from now.

Got a retirement savings question? We can help you track down the information you need. Just give us a call.