The 2022 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2022 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.
The 2022 cost-of-living adjustments (COLAs) were released for:
- pension plan dollar limitations, and
- other retirement-related provisions.
Highlights of Changes for 2022
The contribution limit has increased from $19,500 to $20,500 for employees who take part in:
- most 457 plans, and
- the federal government’s Thrift Savings Plan.
The catch-up contribution limit for employees aged 50 and over in the plans above remains $6,500.
The annual limit on contributions to an IRA remains unchanged at $6,000. The $1,000 IRA catch-up contribution amount is not subject to inflation adjustments.
The income ranges increased for determining eligibility to make deductible contributions to:
- Roth IRAs, and
- to claim the Saver’s Credit.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse takes part in a retirement plan at work. The phase out depends on the taxpayer’s filing status and income.
- Single taxpayers covered by a workplace retirement plan, the phase-out range is $68,000 and $78,000, increased from between $66,000 and $76,000.
- Joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the phase-out range is $109,000 and $129,000, increased from between $105,000 and $125,000.
- An IRA contributor, who is not covered by a workplace retirement plan but their spouse is, the phase out is between $204,000 and $214,000, increased from between $198,000 and $208,000.
- For a married individual filing a separate return who is covered by a workplace plan, the phase-out range remains $0 to $10,000.
- The phase-out ranges for Roth IRA contributions are:
- $129,000 to $144,000, for singles and heads of household,
- $204,000 to $214,000, for joint filers, and
- $0 to $10,000 for married separate filers.
Finally, the income limit for the Saver’ Credit is:
- $68,000 for joint filers,
- $51,000 for heads of household, and
- $34,000 for singles and married filing separately.