Tips and Advice

IRS Announces Changes For Retirement Accounts

The IRS made tax changes that will affect your traditional IRA and 401(k), as well as other accounts (like 403(b), 457(b), and Thrift Savings Plans).
money in jar for retirement
By AmOne
Updated on: November 10th, 2022

money in jar for retirement To help taxpayers, the Internal Revenue Service (IRS) has taken the step of changing its regulations regarding contributions to retirement accounts. What this means is that you can save more money by increasing the amount you put toward a 401(k) or an Individual Retirement Account (IRA).

The IRS has also made changes to the income limits on tax deductions for these contributions, raising the limits so that the Modified Adjusted Gross Income (MAGI) covers a broader group.

In simpler terms, here’s what the changes mean for you:

  • You can contribute more to your 401(k), 403(b) (you are probably familiar with this if you work for a non-profit 501(3)c charitable organization), 457(b) (government employees have probably heard of this one, or a Thrift Savings Plan (available to those who work in civil service or are a part of a uniformed service);
  • You can add more to your Traditional IRA, as well as taking a tax deduction for those contributions. This is limited to the Traditional IRA, however, and does not apply to a Roth IRA;
  • While you can’t contribute more, the income limit restrictions on Roth IRAs were changed. The income limits were raised by $2,000 for the MAGI, meaning that if you earned too much to be eligible last year, you may be eligible this tax year; and
  • The Saver’s Credit income limit was also raised to where married couples can earn $1,500 more. The income limit for individuals was raised by $750 and the limit for those who file as the head of the household was raised by $1,125.

Miranda Marquit of InvestingAnswers has more over at the Business Insider.