Mercer has projected 2022 limits for individual retirement accounts (IRAs) and the saver’s credit. These unofficial 2022 limits are determined using the Internal Revenue Code (IRC)’s cost-of-living adjustment methods, chained Consumer Price Index for All Urban Consumers (chained CPI) values through July and Mercer’s projected chained CPI for August. IRS usually announces official limits for these benefits in October or November, along with final limits for qualified retirement plans.
Despite the unusually large increase in chained CPI for the year (3.1% for the 11 months ending July 2021), maximum 2022 deductions for traditional IRA contributions are projected to remain at 2021 levels due to the IRC’s rounding rules. Adjusted gross income (AGI) phaseout thresholds for Roth IRA contributions and a qualified plan participant’s deductible traditional IRA contributions are more sensitive to inflation and are expected to rise by the equivalent of several years’ worth of typical increases. The catch-up contribution limit isn’t annually adjusted. The AGI thresholds for spouses filing separately are set to $0.
AGI levels at which employee contributions to a qualified retirement plan or an IRA qualify for saver’s credit are all expected to increase significantly in 2022, due to the high level of inflation since last September.