Page 15 - Southern Exposure - July '22

Southern Exposure, Page 15

financial focuS

New Limits Expand 401(k), IRA Opportunities

By Sally Sima Stahl

You could spend two, both of you are covered by an employer-sponsored plan, can help yourself move closer to your retirement goals.
or even three, decades in then your deductions could be reduced or eliminated based This article was written by Edward Jones for use by
retirement. So, to pay for all on your income. your local Edward Jones Financial Advisor, Edward
those years, you’ll probably Single taxpayers can claim the full deduction if your Jones, Member SIPC.
need to take full advantage modified adjusted gross income (MAGI) is $68,000 or less Edward Jones is a licensed insurance producer in
of your retirement accounts. ($109,000 for married filing jointly), with deductibility all states and Washington, D.C., through Edward D.
And in 2022, you may have decreasing at higher income levels and phasing out Jones & Co., L.P., and in California, New Mexico and
expanded opportunities entirely at $78,000 ($129,000 for married filing jointly). Massachusetts through Edward Jones Insurance Agency
to deduct retirement plan But here’s the key point: Compared to 2021, these ranges of California, L.L.C.; Edward Jones Insurance Agency of
contributions on your tax are $2,000 higher for single filers and $4,000 higher for New Mexico, L.L.C.; and Edward Jones Insurance Agency
return. those who are married and filing jointly – which means of Massachusetts, L.L.C.
Before looking at what’s that this year, you might have more opportunities to make Edward Jones, its employees and financial advisors
changed this year, let’s review the key benefits of these deductible contributions. cannot provide tax advice. You should consult your
accounts: And a similar type of increase applies to Roth IRA qualified tax advisor regarding your situation.
• Traditional IRA – You typically contribute pretax eligibility. In 2022, if you’re a single filer, you can put Contact us at (561) 748-7600, Sally Sima Stahl, AAMS,
(deductible) dollars to a traditional IRA, and your earnings in up to $6,000 ($7,000 if you are 50 or older) in a Roth 1851 W. Indiantown Road, Ste. 106, Jupiter, FL 33458.
can grow tax-deferred. IRA if your modified adjusted gross income (MAGI) is
• Roth IRA – You invest after-tax dollars in a Roth IRA, less than $129,000 – up from $125,000 in 2021. Allowable
so your contributions won’t lower your taxable income, contributions are reduced at higher income levels and
but your earnings can grow tax free, provided you’ve had phased out if your MAGI is $144,000 or more, up from
your account at least five years and you’re 59½ or older $140,000 in 2021. If you’re married and file jointly, the
when you begin taking withdrawals. respective ranges are $204,000 to $214,000, up from
• 401(k) – A 401(k) or similar plan (such as a 457(b) $198,000 to $208,000 in 2021. Again, higher ranges
for state and local government employees or a 403(b) may mean more opportunities for you. (Consult your tax
for employees of public schools or nonprofit groups) is advisor to determine your eligibility to contribute to a
generally funded with pretax dollars and provides tax- Roth IRA or make deductible contributions to a traditional
deferred earnings. Some employers offer a Roth 401(k), IRA.)
in which employees contribute after tax-dollars and can And finally, the annual contribution limit for 401(k),
take tax-free withdrawals if they meet the same age and 457(b) and 403(b) plans is $20,500 – up $1,000 from 2021.
length-of-ownership requirements as the Roth IRA. If you’re 50 or older, you can put in an extra $6,500 this
So, what’s different about these plans in 2022? First, year, for a total of $27,000.
consider the traditional IRA. If you – and your spouse, if These changes may not seem monumental, but when
you’re married – don’t have a 401(k) or similar plan, you you’re saving for retirement, any opportunities to invest
can always deduct the full amount of your contribution and potentially reduce taxes, of whatever size, can be
on your tax return, no matter what you earn. But if one or valuable. So, review your options to determine how you

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