Many IRA and retirement plan limits are indexed for inflation each year. Although the amount you can contribute to IRAs remains the same in 2022, other key numbers will increase, including how much you can contribute to a work-based retirement plan and the phaseout thresholds for IRA deductibility and Roth contributions.
How Much Can You Save in an IRA?
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2022 remains $6,000 (or 100% of your earned income, if less). The maximum catch-up contribution for those age 50 or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2022, but your total contributions cannot exceed these annual limits.
Can You Deduct Your Traditional IRA Contributions?
If you (or if you’re married, both you and your spouse) are not covered by a work-based retirement plan, your contributions to a traditional IRA are generally fully tax deductible.
If you’re married, filing jointly, and you’re not covered by an employer plan, but your spouse is, your deduction is limited if your modified adjusted gross income (MAGI) is between $204,000 and $214,000 (up from $198,000 and $208,000 in 2021) and eliminated if your MAGI is $214,000 or more (up from $208,000 in 2021).
For those who are covered by an employer plan, deductibility depends on income and filing status. If your filing status is single or head of household, you can fully deduct your IRA contribution in 2022 if your MAGI is $68,000 or less (up from $66,000 in 2021). If you’re married and filing a joint return, you can fully deduct your contribution if your MAGI is $109,000 or less (up from $105,000 in 2021). For taxpayers earning more than these thresholds, the following phaseout limits apply.
Can You Contribute to a Roth?
The income limits for determining whether you can contribute to a Roth IRA will also increase in 2022. If your filing status is single or head of household, you can contribute the full $6,000 ($7,000 if you are age 50 or older) to a Roth IRA if your MAGI is $129,000 or less (up from $125,000 in 2021). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $204,000 or less (up from $198,000 in 2021). For taxpayers earning more than these thresholds, the following phaseout limits apply.
How Much Can You Save in a Work-Based Plan?
If you participate in an employer-sponsored retirement plan, you may be pleased to learn that you can save even more in 2022. The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan will increase to $20,500 in 2022. This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $6,500 to these plans in 2022 (unchanged from 2021). [Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.]
The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) will increase to $14,000 in 2022, and the catch-up limit for those age 50 or older remains $3,000.
If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($20,500 in 2022 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can save the full amount in each plan — a total of $41,000 in 2022 (plus any catch-up contributions).
The maximum amount that can be allocated to your account in a defined contribution plan [for example, a 401(k) plan or profit-sharing plan] in 2022 is $61,000 (up from $58,000 in 2021) plus age 50 or older catch-up contributions. This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.
Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2022 is $305,000 (up from $290,000 in 2021), and the dollar threshold for determining highly compensated employees (when 2022 is the look-back year) will increase to $135,000 (up from $130,000 in 2021).
Have a wonderful weekend.
Golf Tip of the Week
Two quick grip tests that will increase your control on iron shots
If your club is slipping or turning in your hands mid-swing, your chances of swinging with any speed and making solid contact are greatly reduced. Golf Digest Teaching Professional Erika Larkin says you can boost your control by focusing on hand position and pressure.
Evaluate your hand placement with Larkin’s first test. Start by gripping the club normally, then remove your bottom hand. Using only the pointer finger from your lead hand, try to hinge the club straight up.
If you can perform the move easily, your hand positioning is good, and you can move onto Larkin’s next test. However, if you struggle to raise the club or feel it slipping in your hand, your placement is off.
Because the grip is so personal, you might need to try out a couple of different top-hand positions until you find the right one for you. Focusing on the heel of your hand is a good place to start. As Larkin demonstrates in this test, you’ll notice that her heel pad is positioned on top of the club. With this key, you’ll be able to keep the heel of your hand connected with the club as you raise and lower it, increasing your leverage and range of motion.
Check your grip pressure with Larkin’s second test. With a short iron or wedge, grip the club with your lead hand and remove your thumb and pointer finger. Using your remaining three fingers, make a couple of practice swings with some speed and see if you can maintain a sense of control without the club slipping.
“If you can do that, you’re in position and you’ve got the right pressure,” Larkin says, “Once you’ve got that feeling, put it to the test with both hands on the club.”
With your improved hand positioning and pressure, you’ll be able to keep your clubface consistent through impact, creating solid contact and a better ball flight. Use Larkin’s grip tests as needed to maintain an effective hold on the club.
Tip adapted from golfdigest.comi
Recipe of the Week
- 1 sheet puff pastry
- 3 oz goat cheese
- 1 large egg yolk
- 1 1/2 tablespoons milk
- 1 tablespoon chives
- 1 tablespoon fresh thyme
- Salt and pepper
- Olive oil
- Sea salt and fresh thyme (for cherry tomato tartlets)
- Honey and basil (for strawberry tartlets)
- Sea salt and cracked pepper (for squash tartlets)
- Lemon zest (for asparagus tartlets)
- Preheat oven to 400°F. Line baking sheet with parchment. Roll out 1 sheet puff pastry (thawed, following package directions) on floured board. Using a 5-inch cookie cutter, cut 6 rounds. Place on baking sheet and prick holes with a fork, leaving a half-inch border around each.
- In food processor, pulse goat cheese, egg yolk, milk, chives, thyme, and salt and pepper to taste until smooth. Spread evenly over the inner circle of each tartlet. (Can be refrigerated the night before; bring to room temperature before adding toppings and baking.)
- Top tartlets with one of the following combinations:
- Cherry tomatoes: Halve and place on tartlet, alternating cut side up and down. Drizzle with olive oil.
- Strawberries: Hull and quarter and arrange like petals in a concentric circular pattern.
- Yellow and green squash: Create thin, ribbon-like strips using a vegetable peeler. Wind into tight coils and arrange in a floral pattern. Drizzle with olive oil.
- Asparagus: Halve and center in flat rows. Drizzle with olive oil.
- Bake for 10 to 12 minutes until pastry is puffed and golden brown. Remove from oven and garnish the cherry tomato tartlets with sea salt and fresh thyme, the strawberry tartlets with honey and basil, the squash tartlets with sea salt and cracked pepper, and the asparagus tartlets with lemon zest. Serve warm or at room temperature.
Recipe adapted from shape.comii
Health Tip of the Week
5 Pieces of Expert Advice on Stressing Less in 2022
The new year is here, and with it comes a season of resolution. Wishes for a healthier, happier life convert into action, and for some, the first wish is for less stress. To help you relieve stress that may come your way in 2022, Forbes Health Advisory Board members shared their advice on stress management, from practicing gratitude to practicing relaxation. Read on for their recommendations for stressing less in 2022.
- Build Relaxation into Your Routine
- Make Stress Momentary
- Practice Gratitude
- Try a Positive Mantra
- Lower Your Cortisol Levels
Tip adapted from forbes.comiii
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