Our last post discussed several factors to bear in mind to ensure a happy retirement.
This week, since it is by no means too early for tax planning, we talk about the 2022 limits on contributions to retirement plans.
We would recommend contributing the full amount available to you into whatever retirement account(s) you own.
Further, we recommend checking into all retirement options available through your employer – public schools, colleges, universities, churches, hospitals and other tax-exempt organizations may offer more than one option, including 401(k), 403(b), and/or 457 plans, and may also allow you to participate in and contribute to more than one employer-sponsored plan – e.g., offering you both a 401(k) and a 403(b) plan.
If you have both a 401(k) and 403(b) plan account, be aware that the total annual contribution to employer-sponsored retirement plans is $20,500 for 2022 – or $27,000 if you are over 50. However, it may be useful to have more than one employer-sponsored plan account, especially if one or more of the plans does not allow catch-up contributions. In such a case, you can contribute the amount of your catch-up to the second retirement plan account – the IRS permits you to treat this additional contribution as a catch-up for their purposes, even if your plan does not.
However, if your employer offers you both a 401(k) plan and a 457 plan, a deferred compensation plan, you can contribute $20,500 to each plan in 2022, not counting catch-up contributions. If you have this option available, you can contribute up to $54,000 tax-deferred for 2022, if you are over 50 – $20,500 plus $6,500 to each plan account.
We invite you to consult with our CPAs/financial planners for advice on how to maximize your retirement assets, reduce your tax liabilities, and plan for the retirement you want to look forward to.
Please click here to email us directly – let us know how we can help.
Until next time –