January is a good time to assess whether you can increase your level of retirement plan contributions for the upcoming year. If you are self-employed, you may still have time to setup and fund a plan for the prior calendar year through your tax-filing deadline. Some limits have increased for 2022 while other have remained the same as 2021.
2022 Retirement Plan Contribution Limits
Plan Type Contribution Limit
401(k), 403(b), 457(b), Roth 401(k) plans, elective deferral limit (under age 50) $20,500
401(k), 403(b), 457(b), Roth 401(k) plans, elective deferral limit (age 50 and older) $27,000
Limit on additions to defined contribution plans (under age 50) $61,000
Limit on additions to defined contribution plans (age 50 and older) $67,500
SIMPLE IRA elective deferral (under age 50) $14,000
SIMPLE IRA elective deferral (age 50 and older) $17,000
Annual benefit limit on defined benefit plans $245,000
2022 Individual Retirement Account (IRA) Contribution Limits
IRA / Roth IRA (under age 50) $6,000
IRA / Roth IRA (age 50 and older) $7,000
A Roth IRA is often an ideal retirement account to consistently fund due to its tax-free growth and ability to withdraw funds without taxes upon reaching age 59 ½. In most cases, if you are eligible to fund a Roth IRA, you should do so. This type of account can still be funded for 2021 up until the tax filing deadline, however there are income limitations. If your income exceeds the limits to fund a Roth IRA directly, a backdoor Roth IRA could be an option for you.
2022 Phase-out of Roth IRA Contribution Eligibility (Modified Adjusted Gross Income)
Single $129,000 – $144,000
Married Filing Jointly $204,000 – $214,000
Married Filing Separately $0 – $10,000
Although not a retirement account, a health savings account can provide a current tax deduction, tax-free growth, and the ability to withdraw funds for medical expenses tax-free. If you have a high deductible health insurance plan that allows you to fund an HSA, you likely should consider doing so. HSAs can also be funded for 2021 up until your tax filing deadline. 2022 limits have increased slightly.
2022 Health Savings Account Contribution Limits (HSA)
HSA contribution individual coverage $3,650
HSA contribution family coverage $7,300
Maximizing your contributions to and ensuring your investments are held in the most tax advantaged accounts available to you is important planning. Be sure to discuss these topics with your tax advisor, and if you have questions, feel free to get in touch.
For a comprehensive review of your personal situation, always consult with your legal or tax advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.