As we enter the last quarter of the year, there is still time to contribute to certain accounts before 2022. Because some of the maximum account limits changed from last year, and some haven’t, here’s a quick review of those limits and when you need to contribute:
2021 Account Limits: HSA
For your health savings account (HSA,) you can contribute until tax day the following year. That means you have until April 18, 2022, to contribute to your HSA for 2021 taxes.
For the 2021 calendar year, the IRS announced the following limits:
- Individual with high-deductible health plan: Up to $3,600
- Individual paying out-of-pocket: Up to $7,000
- Individual with family coverage under a high-deductible health plan: Up to $7,200
- Individual paying for family coverage out-of-pocket: Up to $14,000
- Age 55 or older: Can pay an additional $1,000 as a catch-up contribution
The flexible spending account (FSA) limit remains unchanged for 2021. Employees can contribute up to $2,750 in pre-tax money. There were a couple key changes made to FSAs in 2020, and it may apply to you if your employer enacted those changes.
First, any money you didn’t spend in your FSA account in 2021 can roll over to 2022. That means you can contribute the full $2,750 in 2022, plus any unused funds from 2021. Just keep in mind that this doesn’t last forever. You’ll only be able to carry over up to $550 from your 2022 plan.
And second, Congress has extended the FSA grace period for 2021. If your plan honors this grace period extension, then you can have up to 12 months after your deadline to contribute to your plan. Make sure you check with your employer to find out what the grace period is for your company. Once again, this change only goes until the end of 2022, when the grace period reverts back to 2.5 months.
Roth and Traditional IRA Limits
For 2021, the amount you contribute to all of your Roth and Traditional IRA accounts is limited to $6,000, or $7,000 if you’re age 50 or older.
You have until tax day to contribute to these accounts for 2021, which will be April 18, 2022.
Your 2021 Simple IRA contributions are limited to $13,500. If your plan allows for catch-up contributions (for ages 50 or over at the end of the calendar year,) then you can make a catch-up contribution of up to $3,000.
For employees, the last day to contribute to a Simple IRA is Dec. 31, 2021.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.