The IRS has made some changes for Americans saving for retirement with 401(k) and IRA accounts in 2022. We discuss these changes, as well as what’s staying the same, below.
Changes to 401(K)s
Contribution limits to workplace 401(k)s are going up in 2022. Workers will be able to contribute up to $20,500, which is a $1,000 increase over the contribution limits set in 2020 and 2021. This limit increase also applies to 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. However, the catch-up contribution limit for employees ages 50 and up will not be changing. That limit will remain $6,500.
The contribution limit for a SIMPLE IRA—a retirement plan intended for small businesses with 100 or fewer employees—will increase next year as well. Workers with this plan will be able to invest up to $14,000, up from $13,500. Just as with 401(k)s, though, the catch-up contribution limit for workers at least 50 years old will remain the same. This limit is $3,000.
Changes to IRAs
Unlike 401(k) contribution limits, the limit on annual contributions to an Individual Retirement Account (IRA) is not increasing in 2022. It will remain at $6,000. Likewise, the catch-up contribution limit will remain the same at $1,000. However, income limits for making deductible contributions to a traditional IRA are going up, as are the income limits for making any type of contribution to a Roth IRA.
Income limits for traditional IRAs in 2022 will change as follows:
- For single tax filers covered by a workplace retirement plan, the eligibility for full contribution limit is increasing from $66,000 to $68,000. The phase-out limit is increasing from $76,000 to $78,000.
- For married joint filers who are personally covered by a workplace retirement plan, the income limit for full eligibility is increasing from $105,000 to $109,000. The phase-out limit is increasing from $125,000 to $129,000.
- For married joint filers whose spouse is covered by is a workplace retirement plan even though you aren’t, the income limit for full eligibility is increasing to $204,000, up from $189,000. The phase out limit is increasing from $198,000 to $208,000.
Income limits for Roth IRA in 2022 will change as follows:
- Income eligibility for single tax filers and heads-of-household is increasing to $129,000 from $125,000. The phase-out limit will also be increasing—from $140,000 to $144,000.
- Income eligibility for joint filers will increase to $204,000 for full contributions. This is up from $198,000. Additionally, the phase-out limit is increasing from $208,000 to $214,000.
