Family

Annual Retirement Savings & Tax Guide: The 'Cheat Sheet' 2022

Family

At the start of a new year, our wealth advisors are typically asked about contribution limits to everything from 401(k) plans and Individual Retirement Accounts to Medicare as well as health savings accounts. 

A favorite tool we've found to help clients of all ages and tax brackets is a comprehensive set of tables compiled by the College for Financial Planning. The college has given Index Fund Advisors authorization to republish these graphics. It has also provided us with support from Mike Harris, a professor and chairman of the college's retirement studies department. 

Below is a breakdown with some key contribution limits in 2022 as highlighted by Harris. It can act as a sort of 'cheat sheet' for you to discuss different financial and investment-related matters with one of IFA's advisors. John Dahlin, who heads up IFA Taxes, might also be a good resource in reference to reviewing changes in tax and savings contribution rates. He's an experienced Certified Public Accountant (CPA) who works with both business owners and individual taxpayers on issues ranging from tax preparation to bookkeeping and quarterly payroll planning. 

(Note: Last year's version of this article covering 2021 limits can be found by clicking here.)

Retirement Plans

This year, elective deferrals to workplace retirement savings programs such as 401(k) and 403(b) plans are going up by $1,000 to $20,500 a person for those under the age of 50. For those aged 50 and up, a worker can still contribute an additional $6,500, setting total contributions for $27,000 in 2022. 

Also of note: IRA and Roth IRA contribution limits remain the same this year ($6,000 for individuals under the age of 50 with an added catch-up contribution of $1,000 allowed for those 50 or older). Meanwhile, SIMPLE plan contributions rose by $500 to $14,000 per person in 2022 with the catch-up (50 or older) remaining at $3,000 per person. 


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Social Security

In 2022, the taxable wage base went up by $4,200 to $147,000 a person. Another notable change was an increase of $197 a person to $3,345 in the maximum monthly benefit for a worker retiring at full retirement age (FRA). Meanwhile, Social Security's annual cost-of-living adjustment increased by 5.9%, which was an increase from 2021's 1.3% adjustment. (Note: FICA refers to the Federal Insurance Contributions Act and SECA is the Self Employed Contributions Act. Also, FRA stands for "Full Retirement Age.") 


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Estate & Gift Tax

The annual gift tax exclusion went up $1,000 per person to $16,000 and the maximum estate tax rate stayed at 40% in 2022. But the estate and gift tax exclusion rose to $12,060,000 from the previous year's 11.70 million. Also, the applicable credit amount increased a bit to $4,769,800 from 2021's $4,625,800. 


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Medicare

In general, the Part A monthly premiums jumped to a maximum of $499 (from $471) in 2022 and the base Part B monthly premium rose to  $170.10 (from $148.50). Skilled nursing care costs went up slightly in some cases, as did the Part B deductible ($233 in 2022 vs. $203 in 2021). In terms of Part D, the deductible went up to $480 (from $445) and the out-of-pocket threshold increased to $7,050 in 2022 as opposed to the previous year's $6,550. 


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Health Savings Account

The minimum deductible amount for a single saver remains the same in 2022 at $1,400. For a family, it's still set at $2,800. The maximum out-of-pocket amount has risen some — $50 more this year to $7,050 for a single person and $100 more to $14,100 for a family. The HSA statutory contribution maximum is also higher for a single saver ($3,650 vs. $3,600 in the previous year) and a family ($7,300 vs. $7,200). The catch-up contribution, however, for those age 55 or older stays at $1,000 in 2022. 


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Education

The phaseout levels for tax savings on a Coverdell Education Savings Account, both for single taxpayers as well as those who are married and filing jointly stayed the same in 2022. Those are: $95,000-$110,000 for single and $190,000-$220,000 for people who are married and filing jointly. As shown in the table below, the phaseout ranges for the Lifetime Learning Credit also stayed the same in 2022 at $80,000-$90,000 for individuals and $160,000-180,000 for those married and filing jointly. Also, the exclusion phaseout for EE bonds used for education for single tax filers increased to $85,800-$100,800. That used to be $83,200-$98,200 in 2021. For those married filing jointly, the exclusion phaseout for EE bonds rose to $128,650-158,650. In the previous year, such a phaseout was set at $124,800-$154,800.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Income Taxes & Schedules


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.

Other Items of Interest


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


Source: College for Financial Planning. Informational use only. Not intended to be tax advice.


This is intended to be informational in nature and should not be construed as an offer, solicitation, recommendation, endorsement of any security, or tax advice. As a division of Index Fund Advisors, Inc., IFA Taxes provides a wide array of tax planning, accounting and tax return preparation services for individuals and businesses across the United States. IFA Taxes does not provide auditing or attestation services and therefore is not a licensed CPA firm. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. Federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter herein.

For more information about Index Fund Advisors, Inc, please review our brochure at https://www.adviserinfo.sec.gov/ or visit www.ifa.com.