2022 Retirement Savings Limitations Released
On November 4, 2021, the IRS issued Notice 2021-61, which contains the 2022 IRA and retirement savings plan limitations. Many limitations will increase for 2022, as will the “saver’s credit” income amounts.
IRA Contribution Amounts
Annual limitations for IRA contributions and deductibility for those who are active participants in employer-sponsored retirement plans are subject to annual cost-of-living adjustments (COLAs) and are as follows for 2022.
Traditional and Roth IRA contributions: $6,000 (unchanged) plus $1,000 catch-up contribution (not subject to COLAs)
Traditional IRA deductibility phase-out for single taxpayers participating in employer plans rises to $68,000–$78,000 (was $66,000–$76,000)
Traditional IRA deductibility phase-out for married joint filing taxpayers participating in employer plans rises to $109,000–$129,000 (was $105,000–$125,000)
Traditional IRA deductibility phase-out for married with spouse an active participant in employer plan rises to $204,000–$214,000 (was $198,000–$208,000)
Roth IRA income limitation for determining maximum contribution for married joint filers: the phase-out range rises to $204,000–$214,000 (was $198,000–$208,000)
Roth IRA income limitation for determining maximum contribution for single filers and heads-of-households: the phase-out range rises to $129,000–$144,000 (was 125,000–$140,000)
Employer-Sponsored Retirement Plans
The following are key employer-sponsored retirement plan limitations that affect defined contribution plans (e.g., 401(k) plans), defined benefit plans, 403(b) plans, governmental 457(b) plans, simplified employee pension (SEP) plans, and savings incentive match plans for employees of small employers (SIMPLE) IRA plans. These are subject to annual COLAs and are as follows for 2022.
Annual additions under Internal Revenue Code Section (IRC Sec.) 415(c)(1)(A) for defined contribution plans: $61,000 ($58,000 for 2021)
Annual additions under IRC Sec. 415(b)(1)(A) for defined benefit pension plans: $245,000 ($230,000 for 2021)
Annual deferral limit (402(g) limit) for 401(k), 403(b) and 457(b) plans: $20,500 ($19,500 for 2021)
Catch-up contributions to 401(k), 403(b), and 457(b) plans: $6,500 (unchanged)
Annual deferral limit for SIMPLE IRA and SIMPLE 401(k) plans: $14,000 ($13,500 for 2021)
Catch-up contributions for SIMPLE IRA and SIMPLE 401(k) plans: $3,000 (unchanged)
IRC Sec. 401(a)(17) compensation cap: $305,000 ($290,000 for 2021)
Highly compensated employee (HCE) definition income threshold: $135,000 ($130,000 for 2021)
Top-heavy determination key employee definition income threshold: $200,000 ($185,000 for 2021)
SEP plan employee income threshold for benefit eligibility: $650 (unchanged)
Qualifying longevity annuity contract (QLAC) amount excludible from required minimum distribution determinations: $145,000 ($135,000 for 2021)
Saver’s Credit
Taxpayers who make contributions to IRAs or deferral-type employer-sponsored retirement plans of up to $2,000 may be eligible for a special income tax credit (the “saver’s credit”) of 10, 20, or 50 percent of the amount contributed, depending on their income.
For joint filers, the maximum adjusted gross income level for
the 50 percent tax credit is $41,000;
the 20 percent tax credit is $44,000; and
the 10 percent tax credit is $68,000.
For head of household filing status, the maximum adjusted gross income level for
the 50 percent tax credit is $30,750;
the 20 percent tax credit is $33,000; and
the 10 percent tax credit is $51,000.
For all other filing statuses, the maximum adjusted gross income level for
the 50 percent tax credit is $20,500;
the 20 percent tax credit is $22,000; and
the 10 percent tax credit is $34,000.
