IRS releases 2022 retirement plan and IRA COLA-based limitation amounts

The IRS has released its 2022 cost-of-living-adjusted limitation amounts for tax-qualified retirement plans and IRAs. Read on for a summary of the most important updates.

Tax-qualified retirement plans

• Defined benefit plan annual accrual limit – increased from $230,000 to $245,000.
• Defined contribution plan annual addition limit – increased from $58,000 to $61,000.
• Elective deferrals annual limit – increased from $19,500 to $20,500.
• Annual compensation limit – increased from $290,000 to $305,000.
• Compensation threshold for top-heavy plan “key employee” status – increased from $185,000 to $200,000.
• Compensation threshold for “highly compensated employee” status – increased from $130,000 to $135,000.
• Dollar limit for catch-up contributions for individuals aged 50 or over – unchanged at $6,500.
• Contribution limit for SIMPLE retirement accounts – increased from $13,500 to $14,000.
• Annual Section 457(b) plan limit – increased from $19,500 to $20,500.

Traditional IRAs

• Annual maximum deductible amount for traditional IRA contributions – unchanged at $6,000.
• Dollar amount for determining deductible amount of traditional IRA contributions
  • For active participants in an employer retirement plan filing a joint return or as a qualifying widow(er) – increased from $105,000 to $109,000.
  • For all others who are active participants in an employer retirement plan (other than married taxpayers filing separate returns) – increased from $66,000 to $68,000.
• Adjusted gross income limit for determining deductible amount of a traditional IRA contribution if not an active participant in an employer retirement plan but spouse is an active participant – increased from $198,000 to $204,000.
• Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions
  • For single individuals and heads of household who are active participants in an employer retirement plan – increased from $66,000-$76,000 to $68,000-$78,000.
  • For married couples filing jointly where the spouse who makes the traditional IRA contribution is an active participant in an employer retirement plan – increased from $105,000-$125,000 to $109,000-$129,000.
  • For traditional IRA contributions by an individual who is not an active participant in an employer retirement plan but whose spouse is – increased from $198,000-$208,000 to $204,000-$214,000.

Roth IRAs

• Adjusted gross income limit for determining maximum Roth IRA contributions
  • If married and filing jointly or if filing as a qualifying widow(er) – increased from $198,000 to $204,000.
  • For all others (other than married taxpayers filing separate returns) – increased from $125,000 to $129,000.
• Adjusted gross income phase-out range for contributions to a Roth IRA
  • For married couples filing jointly – increased from $198,000-$208,000 to $204,000-$214,000.
  • For singles and heads of household – increased from $125,000-$140,000 to $129,000-$144,000.

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