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The Internal Revenue Service (IRS) has recently released its 2022 cost-of-living adjustments (COLAs) impacting pension plan dollar limitations as well as additional retirement-related provisions. Overall, the majority of pension plan limitations will change in 2022 because the increase in the cost-of-living index from inflation met the statutory thresholds, triggering their adjustments. Despite this, other limits will remain the same.
Employees who take part in 401(k), 403(b) and most 457 plans, as well as the federal government’s Thrift Savings Plan, will benefit from an increased contribution limit of $20,500 (up $1,000 from last year). The annual limit for IRA contributions stays the same at $6,500, and the catch-up contribution limit for individuals 50 and over also remains at $3,000. When determining eligibility to make deductible contributions to IRAs, Roth IRAs and claiming the Saver’s Credit, the income ranges increased.
When a taxpayer meets specific conditions, they may deduct contributions to a traditional IRA. If a taxpayer or their spouse participates in a retirement plan at work, the deduction phases out, depending on the individual’s income and filing status. For example, if covered by a workplace retirement plan, the phase-out thresholds are as follows:
The phase-out thresholds for Roth IRA contributions are:
The income limits for the Saver’s Credit are:
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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