RMDs from Inherited IRAs: Currently there is ambiguity in the IRS rules on distributing the funds in an inherited IRA. Until this issue is clarified, we believe the following is the safest way to handle these funds. If required minimum distributions (RMDs) were already being distributed for a deceased owner’s IRA, annual RMDs must be paid to the beneficiary in years 1 through 9. The final distribution of the remainder of the account must be depleted by the 10th year. However, if the deceased owner of the IRA had not begun taking payouts, there are no yearly required minimum distributions, but the funds must be depleted in 10 years.
Deducting Roth IRA Losses: Prior to 2017, Roth IRA owners could claim a loss when closing out a poor performing Roth IRA. The account holder had to close all their Roth IRAs, and the loss was treated as a miscellaneous deduction subject to the 2%-of-adjusted gross income threshold. Please note that this tax break was not extended.
2022 Contribution Limits: The following is a list of changes to contribution limits for the various retirement funds:
- 401(k), 403(b) and 457 Plans: Contribution limit is $20,500, with those born before 1973 able to contribute an extra $6,500.
- SIMPLE Plans: Contribution limit is $14,000, with people 50 and older able to contribute an additional $3,000.
- Traditional IRAs and Roth IRAs: Limit remains $6,000, with those 50 and older able to contribute an additional $1,000. However, the phaseout levels are increased. For Roth IRAs, the contributions phaseout is at adjusted gross incomes (AGI) of $204,000 to $214,000 for couples, and $129,000 to $144,000 for singles. For traditional IRAs, the contribution phaseout is at AGIs of $109,000 to $129,000 for couples, and $68,000 to $78,000 for single filers. If only one spouse is covered by an employer-sponsored plan, the phaseout for deducting a contribution for the uncovered spouse begins at AGIs of $204,000 to $214,000.