By Alessandra Malito
Americans will be able to save more in their workplace retirement accounts in 2022, the Internal Revenue Service said on Thursday.
As part of the changes, employees will be able to contribute $20,500 to their 401(k), 403(b), the federal government’s Thrift Savings Plan and most 457 plans in 2022, up from $19,500 in 2021. The catch-up contribution for workers who are age 50 and older will remain unchanged, at an additional $6,500, so in 2022, an employee participating in one of these workplace plans who is at least 50 years old can defer $27,000 to their account.
The income thresholds for qualifying deductible contributions to traditional IRAs also increased. Americans can always contribute to traditional IRAs, but must meet income limits in order to deduct their contributions for calculating their adjusted gross income if they participate in a workplace retirement savings plan. The income ranges also increased to claim the Saver’s Credit.
In 2022, the income ranges are: – For single taxpayers, $68,000 to $78,000, up from $66,000 to $76,000
– For couples who are married filing jointly and if both spouses are participating in a workplace retirement plan, $109,000 to $129,000; for the spousal IRA contributions, where one spouse is covered by a workplace plan but the other is not and they are married filing jointly, $204,000 to $214,000.
– For couples who are married filing separately, the range remains at $0 to $10,000. The contribution limits for IRAs also remained unchanged, at $6,000 with an additional $1,000 for catch-up contributions.
The contribution limits for IRAs also remained unchanged, at $6,000 with an additional $1,000 for catch-up contributions for savers age 50 and older.
The thresholds for Roth IRAs have also increased. Unlike traditional IRAs, workers must meet these thresholds in order to contribute to a Roth IRA. In 2022, the ranges will be $129,000 to $144,000 for singles and heads of household; $204,000 to $214,000 for married couples filing jointly; and $0 to $10,000 for married couples filing separately.
For the Saver’s Credit, available to low- and moderate-income workers who save for retirement, the limits are: $34,000 for single individuals, $51,000 for heads of household, and $68,000 for married couples filing jointly.