I Am A Scratch Golfer

One of my golfing buddies texted our group wishing us a Happy New Year and informed us that, as of January 1, 2022, as far as he is concerned, we’re all starting the new year as scratch golfers. In other words, we’re now all WAY better than we actually are. So, as Bill Murray’s character Carl Spackler said in the greatest golf movie of all time, Caddyshack, “…I got that going for me. Which is nice.”

What do you have going for you? Reminding ourselves of the many things for which we’re grateful can be an anxiety reducer and helpful for mental health.

As an awkward segue, if you’re searching for ways to maximize your financial health in 2022, here are some highlights of the IRS contribution limits to various types of financial accounts:

• 401(k), 403(b) and 457(b) contribution limits
  • You may contribute $20,500, not counting your employer’s contributions;
  • If 50 or over, you can contribute an additional $6500 in 2022;
  • UK employees can contribute the maximum amounts to both their 403(b) and their 457(b);
• SIMPLE IRA
  • $14,000 for employee contributions;
  • If 50 or over, you can contribute an additional $3,000;
  • Note: Employers provide a match of 3% of the employee’s salary;
• Traditional IRA or Roth IRAs
  • The contribution limits are $6,000 and an additional $1,000 if 50 or over;
  • There are complicated income limits, however, so check with us before contributing;
  • For instance, if single you may not make a tax-deductible contribution to a Traditional IRA if your Modified Adjusted Gross Income is above $78,000;
• SEP IRAs
  • A self-employed business owner may contribute a maximum of $61,000 in tax year 2022;
  • Only employers make contributions to SEPs and the max is 25% of your net earnings from self-employment;
• Required Minimum Distributions (RMD) from tax-deferred retirement accounts
  • If you turn 72 this year, happy birthday, you will now be required to take RMDs from your IRA, 401(k), 403(b), and 457(b);
  • If you are already taking RMDs, obviously those continue;
  • The amount of RMD is based on an IRS formula (we will track that for you).

Friendly advice – don’t be intimidated if these limits are out of reach. Try increasing your personal contributions just 1-2%. You probably won’t miss the cash from your paycheck but your future self will notice the difference.

Steve Byars, CFP®