New Contribution Limits for Retirement Plans, Health & Dependent Savings Accounts, and Estate & Gift Tax for 2022

Estate Planning | Healthcare

 InspireHer By: InspireHer

With a new year comes many new changes – putting up a new calendar, making New Year’s resolutions, AND new contributions and gifting limits imposed by the IRS. The IRS reviews the contribution limits and income phase-out ranges for retirement plans, health and dependent care savings accounts, and gift tax exclusions annually, and makes modifications if needed, mainly for inflation. Many limits were changed starting January 1, 2022. Keep these new limits in mind as you make contribution elections to your employer provided benefits plans or make contributions to various accounts or gifts throughout the year. 

Beginning January 1, 2022, the contribution limits to many retirement plans were increased. Maxing out your employer-provided retirement plan is one of the best ways to save for retirement because it often allows you to receive “free money” with employer matching, along with an immediate tax benefit by reducing your taxable income. Below are several of these changes as they compare to 2021:

Retirement Plan Contribution Limits

2022

2021

Change

Maximum employee elective deferral or pretax contribution limit for 401(k), 403(b) and most 457 plans – younger than age 50

$20,500 

$19,500 

$1,000 

Maximum employee elective deferral or pretax contribution limit for 401(k), 403(b) and most 457 plans – age 50 and older

$27,000 

$26,000 

$1,000 

Traditional & Roth IRA contribution limit - younger than age 50

$6,000 

$6,000 

$0 

Traditional & Roth IRA contribution limit - age 50 & older

$7,000 

$7,000 

$0 

SIMPLE Plan contribution limit - younger than age 50

$14,000 

$13,500 

$500 

SIMPLE Plan contribution limit - age 50 & older

$17,000 

$16,500 

$500 

Defined contribution plan limit (employee + employer) - younger than age 50

$61,000 

$58,000 

$3,000 

Defined contribution plan limit (employee + employer) - age 50 & older 

$88,000 

$84,000 

$4,000 


Many people take advantage of their employer provided retirement plans, but some also want to save more than the plan allows. One way to do this is by making contributions to a Traditional or Roth IRA. You are allowed a tax deduction for contributions made to a Traditional IRA if your income is below a certain threshold. If your income is too high for the deductible contribution, you can still make the Traditional IRA contribution, but no tax benefit is received for the initial investment. Similarly, you are only allowed to contribute directly to a Roth IRA if your income is below a certain threshold. To see if you are eligible to make these contributions in 2022, here are the new income phase-out ranges:

Income Phase-out Ranges for IRAs

2022

2021

Change 

Traditional IRA deductible contribution - Single (covered by workplace retirement plan) 

$68,000 - $78,000 

$66,000 - $76,000 

$2,000 

Traditional IRA deductible contribution - Married Filing Joint (covered by workplace retirement plan)

$109,000 - $129,000 

$105,000 - $125,000 

$4,000 

Traditional IRA deductible contribution - not covered by workplace retirement plan

$204,000 - $214,000 

$198,000 - $208,000 

$6,000 

Roth IRA contribution - Single

$129,000 - $144,000 

$125,000 - $140,000 

$4,000 

Roth IRA contribution - Married Filing Joint

$204,000 - $214,000 

$198,000 - $208,000 

$6,000 


Retirement plan contribution limits are not the only limits that changed for 2022. The IRS also made updates to the following Health and Dependent Care Savings & Spending Accounts:

Health Savings Accounts (HSAs)

2022

2021

Change

HSA contribution limit (employer + employee)

Self-only: $3,650
Family: $7,300 

Self-only: $3,600
Family: $7,200 

Self-only: $50
Family: $100 

HSA catch-up contributions (age 55 or older)

$1,000 

$1,000 

$0 

 

 

 

 

 

 

Health Care Flexible Spending Account (Health FSAs)

2022

2021

Change

Maximum salary deferral

$2,850 

$2,750 

$100 

Maximum rollover amount

$570 

$550 

$20 

 

Dependent Care FSA (DC-FSAs)

2022

2021

Change

Maximum salary deferral (single and married filing jointly)

$5,000 

$10,500 

($5,500)

Maximum salary deferral (married filing separately)

$2,500 

$5,250 

($2,750)

 

 

 

The estate and gift tax limits were a focal point of discussion during 2021, and while no major changes were passed at the end of 2021, IRS did release increased limits for 2022:

Estate & Gift Tax Limits

2022

2021

Change

Annual gift tax exclusion

$16,000 

$15,000 

$1,000 

Gift tax and estate tax exclusion amount

$12,060,000 

$11,700,000 

$360,000 

 

Next Steps:

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Disclosure:

This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

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