In 2022, 401K plan employee contribution maximums have increased by $1K to $20,500 and the catch-up (at age 50) remains at $6,500 (or a maximum of $27K). Total employer and employee contributions for 401K plans has increased to $61K. On the other hand, pension plan contributions are limited to $260K but the amounts are determined early in 2022. IRA contributions remain at $6K and for those over age 50 at $7K but tax deductibility is dependent on earnings and whether you’ve contributed to a 401K/403b plan. A Roth IRA contribution can be made instead of the IRA contribution, and it also has earning limits. Long-Term Capital Gain federal tax rates this year are still at 0%, 15%, and 20% dependent on taxable income levels but these are expected to increase in the new tax plan. Gifts can be made tax free to the recipient up to $16K in 2022 and for non-US citizen spouses this tax-free gift rises to $164K without additional paperwork. Keep in mind that these annual gifting exclusion limits are in addition to the currently huge lifetime tax-free gifting limit of $12.06M per person. The child tax credit and after-tax Roth conversion are part of the new tax plan under consideration.
Edi Alvarez, CFP®
BS, BEd, MS