With the end of the year approaching fast, it is important to look towards the future! Here are some changes the IRS has made for 2022.
1). 2022 401K contribution $20,500. The catch up for those age 50 or older will remain at $6,500.
IRA (Roth) No change for 2022 contribution $6,000. The catch up for those age 50 or older will remain at $1,000.
The max amount from all contributions cannot exceed $61,000- for 2022.
The IRS highlighted the following adjustments taking effect on Jan. 1, 2022, for 401(k), 403(b) and most 457 plans:
| Defined Contribution Plan Limits | 2022 | 2021 | Change |
| Maximum employee elective deferral | $20,500 | $19,500 | +$1,000 |
| Employee catch-up contribution (if age 50 or older by year-end)* | $6,500 | $6,500 | No Change |
| Defined contribution maximum limit, all sources | $61,000 | $58,000 | +$3,000 |
| Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources plus catch-up | $67,500 | $64,500 | +$3,000 |
| Employee compensation limit for calculating contributions | $305,000 | $290,000 | +$15,000 |
2). The second change is that payroll withholdings subject to Social Security FICA will rise to $147,000 from $142,800. Employees who fall into this threshold need to know that Social Security payments will not stop in 2022 until they reach the $147,000.
| Payroll Taxes: Cap on Maximum Earnings | ||
| Type of Payroll Tax | 2022 Maximum Earnings | 2021 Maximum Earnings |
| Social Security | $147,000 | $142,800 |
| Medicare | No limit | No limit |
| Source: Social Security Administration. | ||
Time for ‘Paycheck Checkups’ to Adjust Withholding
As the year end is approaching us I would like to remind employees, especially those with children and other dependents, to use the withholding calculator at IRS.gov to do a «paycheck checkup. Employees who decide to change their withholding amounts should be updated via their payroll provider “Dayforce” so that paycheck adjustments can be made.
For more information, click here to learn more from the IRS website.
