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Attention Investors: There's Good News and Bad News About IRAs in 2022

By Christy Bieber – Nov 19, 2021 at 8:23AM

Key Points

  • IRAs have contribution limits.
  • There are also income limits.
  • Some changes next year could impact who is allowed to invest in an IRA.

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The rules for IRAs are changing in important ways next year.

An IRA can be a great retirement savings account because you don't need an employer to open one, and you have a lot of flexibility as to what you invest in with the money. 

But there are rules you need to be aware of if you'll be using an IRA to save for the future. And there's good news and bad news about how those rules are -- or aren't -- changing in 2022. Here's what you need to know.

Adult looking at paperwork and calculator.

Image source: Getty Images.

Good news: IRA income limits are going up

The good news about IRAs affects only a small portion of investors who currently earn too much income to be eligible to claim the full amount of tax-deductible contributions. 

Income limits apply to making deductible IRA investments. As a result, some people can't benefit from the government subsidy for investing in this type of retirement account. But those income limits are going up next year. Here's what the changes look like:

  • If you're a single taxpayer and have a workplace retirement plan, eligibility for deductible contributions will begin to phase out at $68,000 in 2022, up from the $66,000 limit applicable this year. And you won't fully lose eligibility until you have an income above $78,000, up from $76,000 in 2021.
  • For married joint filers, if you are personally covered by a workplace retirement plan, the phase-out limit will start at $109,000 in 2022, up from $105,000 in 2021. And you don't lose eligibility for contributions until your income hits $129,000 next year, up from $125,000. 
  • For married joint filers not covered by a workplace retirement plan but with a spouse who is, the phase-out range will start at $204,000 and end at $214,000 in 2022, compared with $198,000 to $208,000 in in 2021. 
  • For a married separate filer covered by a workplace plan, the phase-out range didn't change. It's always much lower than for other filers at $0 to $10,000.

These higher-income limits make it possible for more people to benefit from the tax-saving benefits an IRA provides.

IRAs offer more flexibility in investment options than 401(k)s, and you don't need an employer to offer one, so those who gain eligibility next year will benefit from a great new opportunity to take advantage of a top-notch retirement plan. 

Bad news: IRA contribution limits are staying the same

Unfortunately, while there's good news for a small number of people who will be eligible to make deductible contributions to the IRA when they couldn't before, there's bad news for everyone who invests in these type of accounts.

The contribution limits for IRAs will remain the same in 2022, at $6,000. The catch-up contribution limit of $1,000 for investors 50 and over also remains unchanged, so the total maximum IRA contribution for older Americans will still be just $7,000. 

These low limits mean that, for many people, an IRA can't be your sole retirement savings plan, since the contribution limits simply aren't large enough to save all you need for the future. 

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