Major Tax Changes for 2022

IRA: For year 2022, a qualified individual who would be at least 50 years old by the end of the tax year is allowed to make an additional “catch-up” contribution to a conventional or Roth IRA in the amount of $1,000. If a qualified individual will become 50 years old before the end of a calendar year, the individual’s age will be considered to be 50 as of January 1 of that tax year. For 2022, you could still be able to take a full IRA deduction if you were covered by a retirement plan and your 2022 modified AGI is less than $109,000 (married filing jointly or qualifying widow(er)), and $68,000 (single or head of household). A partial IRA deduction is allowed until your MAGI reaches $129,000 if married filing jointly, up to $78,000 if single or head of household, or up to $9,999 if married filing separately.

SIMPLE IRA: This type of plan may only be established by an employer that has 100 or fewer employees whereby each employee receives at least $5,000 in compensation in the preceding year. These are usually employer sponsored plans which may permit employee contributions. For 2022, an employee who will be at least 50 years old by the end of the tax year is able to make an additional “catch-up” contribution to a SIMPLE retirement plan in the amount of $3,000. The contribution limit to a SIMPLE IRA plan for the year 2022 is $14,000, if under age 50; $17,000 if age 50 and older.

Elective Deferral 401(k): These are generally employer sponsored plans which may permit employee contributions. For 2022, an employee who will be at least age 50 by the end of the tax year is able to take an additional “catch-up” contribution to an elective deferral 401(k) retirement plan in the amount of $6,500.

* Individuals who are 50 or older by the end of the year may make catch-up contributions as explained above. Other limits may apply.