Retirement Plan Deferral Limits for 2022

The numbers are in: Among other changes, the IRS has announced that the limit on 401(k) plan deferrals for 2022 is increasing by the hefty amount of $1,000. But the limits on contributions to IRAs are remaining the same (IR-2021-216, 11/4/21).

Here are the details: The contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increasing to $20,500 for 2022, up from $19,500 in 2021. The maximum “catch-up contribution” for someone 50 or older remains at $6,500. Thus, someone in their fifties or sixties can defer as much as $27,000 to a 401(k) in 2022.

The income ranges for determining eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the retirement saver’s credit are all increasing for 2022.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If either the taxpayer or their spouse is covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-out of the deduction doesn’t apply.) 

The new phase-out ranges announced by the IRS for 2022 are as follows: 

For single taxpayers covered by a workplace retirement plan, the phase-out range is now $68,000 to $78,000, up from $66,000 to $76,000.

For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is now $109,000 to $129,000, up from $105,000 to $125,000.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is now $204,000 to $214,000, up from $198,000 to $208,000.

For a married person filing a separate return who is covered by a workplace retirement plan, the phase-out range isn’t subject to an annual cost-of-living adjustment (COLA). Thus, it remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is now $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000. For joint filers, the income phase-out range is now $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual COLA and remains $0 to $10,000.

The income limit for the retirement saver’s credit for low- and moderate-income workers is $68,000 for joint filers, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for single filers and married individuals filing separately, up from $33,000.

Finally, the amount that individuals can contribute to their SIMPLE retirement accounts has increased to $14,000, up from $13,500. The limit for catch-up contributions remains at $3,000.

Note: The limit on annual contributions to an IRA for the 2022 tax year remains unchanged at $6,000. The IRA catch-up contribution limit isn’t subject to an annual COLA and remains $1,000. 

The IRS also issued technical guidance regarding COLAs affecting dollar limits for pension plans and other retirement-related items for 2022. More details are available on the IRS’s website.