Proactive tax planning throughout the year is the key to reducing taxes and maximizing your after-tax dollars for wealth accumulation. This is accomplished by applying changing tax laws to your specific situation. Each year the IRS provides updates to a number of key limits that impact tax deductions, contributions, and other deferrals throughout the year. Below are some of the more notable changes to the law.
Elective deferrals to 401(k), 403(b), 457 and SARSEP’s $22,500 annual limit up from $20,500 for 2022. with a $7,500 age 50+ catchup. The limit for Defined Contribution plans is $66,000.
IRA and Roth IRA contribution limits are increased to $6,500 with the age 50+ catchup remaining at $1,000.
IRA deduction phaseout for active participants in a retirement plan
- Single $73,000 – $83,000 Adjusted Gross Income (AGI)
Married filing jointly $116,000 – $136,000 AGI
Non-active participant married to active participant $218,000 – $228,000 AGI
Roth IRA phaseout
- Single $138,000 – $153,000
Married filing jointly $218,000 – $228,000
- Non–deductible IRA contributions – There is no income limit
- Simple IRA $15,500 maximum contribution with an age 50+ catchup of $3,000
Ohio allows a $4,000 deduction per beneficiary to a 529 college savings plan and the earnings will never be taxed so long as they are used for college expenses.
Estate and Gift Tax
Annual family gift tax exclusion $17,000
Estate and gift tax exclusion $12,920,000
Health Savings Account Contribution Maximum
Catch-up age 55 and older $1,000
Married filing jointly $27,700
Blind and elderly additional deduction single $1,700 and married $1,350 each.
Required Minimum Distributions
Individuals age 70½ or older may have as much as $100,000 a year transferred tax free from their individual retirement accounts (IRAs) to qualified charitable organizations.
Who’s helping you?
At Total Wealth Planning we help our clients every day answer these important and at times stressful questions.
Financial planning is complex and requires the guidance of a trusted and experienced advisor, such as a fee-only Certified Financial Planner™ (CFP®), who plans comprehensively, and with a complete understanding of your particular concerns and goals in life.
Author: Rob Lemmons, CFP® is a principal and director of financial planning at Total Wealth Planning, a fee-only fiduciary financial planning firm in Cincinnati (Blue Ash), Ohio. With over 20 years of experience, Rob oversees every client’s financial planning experience from helping to protect their wealth, corporate benefits, retirement income, and overall wealth transfer strategies. As a CPA, CEPA, and CFP®, Rob is frequently invited to speak on financial planning and tax advisory topics and has been quoted in numerous industry publications including Yahoo finance and the Business Courier. Rob can be reached at firstname.lastname@example.org.