It’s the New Year and Time to Review Your Systematic Contributions to IRAs, Retirement Accounts, and HSAs!

Does your financial plan’s investment strategy include maximizing contributions to an IRA, Roth IRA, Company Retirement Plan, or Health Savings Accounts?

If so, now could be a great time to review and update your systematic contributions. Below we have detailed the new limits and how much you might need to save per paycheck or month throughout 2022 to maximize your accounts.

Traditional IRA & Roth IRA Contributions

The maximum amount you can contribute to a traditional or Roth IRA for 2022 is $6,000. If you’re age 50 and older, you can add an extra $1,000 per year in “catch-up” contributions, bringing the total contribution limit to $7,000. This remains unchanged from 2019 (source).

The monthly maximum you should save if you spread out your savings over 12 months is:

Under 50 years of age:
Contribute $500 monthly to your IRA or Roth IRA

Age 50 or older:
Contribute $583.33 monthly to your IRA or Roth IRA

Do you already contribute automatically to a Roth IRA? If so, make sure that you won’t go over the Roth IRA income limits this year. You can’t fully fund a Roth IRA unless you are under $129k of MAGI (modified adjusted gross income) if you file single or $204k of MAGI if you are married and filing jointly (source).

If you could go over the income limit, and you contribute monthly, consider stopping your automatic contributions so that you don’t have to remove excess contributions (which can be a little bit of a money migraine!)

Contact one of us on your One Life team if you want to adjust your contributions.

IMPORTANT! If you stop automatic contributions, consider saving that money somewhere else (brokerage account, money market, etc.) to help stay on track for your retirement goals.

Company Plans — (401(k), 403(b) Contributions

This year, taxpayers can put an extra $1,000 into certain retirement savings plans. The IRS recently announced that the 2022 contribution limit for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan would increase to $20,500.

Below are the amounts you will need to save to fund the maximum contribution if you begin saving this month (January 2022):

Note: Your employer can match and make profit-sharing contributions on top of your maximum deferral

Note: If you are age 50+, your employer may require you to have a separate catch-up contribution. Here are the maximum amounts if you need to make two separate contributions:

Employer 401(k) Matching Programs

Are you getting all the “free money” that you can? Review your Employer Matching Program to ensure you contribute the maximum needed to take full advantage of your employer contributions.

Health Savings Account Contributions

Health savings account (HSA) contribution limits for 2022 are going up $50 for self-only coverage and $100 for family coverage. Below are the new contribution limits:

Do you want to take advantage of your Health Savings Account max contribution? You can cut a check now to max it out for the year but be conscious of any employer contributions you will receive. Employer contributions plus your contributions can’t exceed the maximums shown above.

Below are the amounts you will need to save to fund the maximum contribution if you begin saving this month (January 2022):

Note: Reduce these amounts by any employer HSA contributions.

Are you wondering if you should change the mix of Roth vs. pre-tax contributions?

Schedule your annual review with your planning team after filing your return. This year, we’ll be holding most client annual reviews in April, May, and June.

Please feel free to contact your One Life team if you have any questions or need assistance adjusting your contributions.