Retirement Plan Contribution Limits for 2022 are Announced

Published on December 2, 2021

The IRS has issued its 2022 contribution limits for IRAs and qualified retirement plans. The IRS notice also includes limits on elective salary deferrals for 401(k) and 403(b) plans as well as many 457 plans.

Note that as always, there are phaseouts for deductible contributions to Traditional and Roth IRAs and workplace retirement plans based on income.

Earning income at any age? You can contribute to your IRA

Thanks to the SECURE Act, there is no age limit for anyone with earned income to make regular contributions to their tax-deferred IRA (including, of course, a self-directed IRA, which carries all the same contribution rules and tax advantages of their regular counterparts).

This rule also applies to individuals aged 72 and up; 72 is the age at which one must start taking required minimum distributions from Traditional IRAs and other retirement plans, but they are now still able to make contributions. Note that there are no RMDs for Roth IRAs, which can continue to grow tax-free earnings until the owner’s death.

Basic retirement plan rules for 2022

Certain amounts will not change in 2022; among those is the deductible amount for an individual making qualified retirement contributions to IRAs, which remains at $6,000 (and $7,000 for those age 50+ who can make catchup contributions). Remember, this amount is an aggregate allowed limit across all Traditional and Roth IRAs.

• The annual contribution limit for SIMPLE retirement accounts is increased from $13,500 to $14,000; the catch-up contribution for those ages 50 and up remains at $3,000
• The compensation amount regarding simplified employee pensions (SEPs) remains unchanged at $650
• The limitation on deferrals for 401(k), 403(b), and most 457 plans is increased to $20,500 (up from $19,500 in 2021)
• The adjusted gross income (AGI) limit for the saver’s credit goes up to $68,000 for married couples filing jointly, $51,000 for heads of household, and $34,000 for single taxpayers and for married individuals filing separately
• For workers with a 401(k) plan, the 2022 contribution limit increases to $20,500 (up $1,000)
• IRS Notice 2021-61 provides guidance for pension plans and other qualified retirement plans

Roth IRA income phaseouts

Single taxpayers and heads of household have different income phaseout ranges for contributing to a Roth IRA. In 2022 these figures rise as follows:

• Single taxpayers from $129,000 to $144,000, up from $125,000 to $140,000
• Married couples filing jointly, $204,000 to $214,000, up from $198,000 to $208,000
• NOTE: There is no cost-of-living adjustment for a married individual filing a separate return and who contributes to a Roth IRA; that remains $0 to $10,000

Income phaseouts and contributions – covered or not covered by a workplace retirement plan

There are rules and limitations regarding tax deductibility of contributions for people who are covered by a workplace retirement plan, those with an IRA but who are married to someone with a workplace retirement plan, and taxpayers filing jointly or separately. It gets a bit complicated depending on one’s filing status and modified adjusted gross income (MAGI), but the IRS provides various charts for taxpayers in different retirement plan situations. Here is the complete chart for those covered by a workplace retirement plan.

If you are a taxpayer who is not covered by a retirement plan at work (but may be married to someone who is), use this chart for information on MAGI and deductible contributions.

Updates for 2022 also apply to certain plans and accounts, with increases in the phaseout ranges by several thousand dollars as follows:

• For single taxpayers and heads of household covered by a workplace retirement plan, the phaseout range for deductible contributions to a traditional IRA will be $68,000 to $78,000 (it was $66,000 to $76,000 in 2021)
• For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the 2022 range will be $109,000 to $129,000, up from $105,000 to $125,000
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $204,000 and $214,000, up from $198,000 and $208,000
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phaseout range remains $0 to $10,000.

HSA contribution limits

In 2022, individuals with a health savings account (HSA) with self-only coverage may contribute up to $3,650 (an increase of $50) and for those with family coverage, the 2022 annual limit is $7,300 (up $100 from 2021). The catchup contribution for people age 55 and up remains at $1,000 over the annual limit.

Need help sorting out your self-directed retirement plan in 2022?

If you’re a self-directed investor, we know you’re already comfortable doing your own research about the alternative assets allowed in self-directed retirement plans. You may be contributing to a self-directed Traditional, Roth, SIMPLE, or SEP IRA, or self-directing the investments within a health savings account (HSA) or education savings account (ESA) and taking advantage of investment opportunities outside of the stock market. Or, even as a savvy investor, you may have questions about the many nontraditional investments allowed in a self-directed retirement plan. As you look ahead to 2022, we’re here to help.

Contact Next Generation Trust Company for answers to your questions about the many options and benefits of self-directed IRAs, insights about this retirement strategy, or to schedule a complimentary educational session about self-direction. If you prefer, you may email us at NewAccounts@NextGenerationTrust.com or call 888.857.8058 to speak to a Next Generation representative—about 2022 contribution limits, IRA rollovers, and including alternative assets without your retirement plan.