It’s a new year and with it brings some new rules and some old rules that I see people get confused about when it comes to retirement plans. Here are some issues that have come up in the last half of the year that need clarification.
First, you have until April 15 2022 to make an IRA contribution for 2021. I had people calling me thinking you had to make contributions before the end of the year. The limit is $6,000 and $1,000 as a catch up if you are 50 plus. For a Roth, the income limits for married filing jointly start phasing out at $198k and end at $208k ($125k to $140k for single filers). So basically you can do a Roth if you make over $198k jointly but the amount you can put in is reduced. The income limits are going up for 2022 so you may be Roth eligible for 2022 and not for 2021. You can also contribute to your IRA for 2022 now. The last thing is the end of back door Roth contributions. Even if you made over the income limit to do a Roth, there used to be a loophole that allowed you to build assets in a Roth. It looks like congress closed that loophole.
It’s always beneficial to consult a tax preparer and financial advisor to stay ahead of the ever changing landscape with regard to retirement plans. If you have a question on which is right for you, feel free to reach out to me.