Before the year wraps up, there are some accounts you can still contribute to. Certain accounts can even reduce your tax burden, so it’s worth looking into before 2023 comes. Here is an overview of important account limits, and how long you have to make contributions:
2022 Account Limits: Health Savings Account
During open enrollment, it’s a good idea to consider opening a health savings account (HSA) – especially if you a high deductible health plan.
An HSA is a savings account that can be spent on qualified medical expenses. It has a triple tax benefit including a tax deduction for money you put into the account, tax-deferred growth, and no taxes for pulling money out for applicable expenses.
You can contribute to your HSA until tax day the following year. For this year’s taxes, that would be April 15, 2023.
Here are the HSA limits for the 2022 calendar year:
- Individual with high-deductible health plan: Up to $3,650
- Individual paying out-of-pocket: Up to $7,050
- Individual with family coverage under a high-deductible health plan: Up to $7,300
- Individual paying for family coverage out-of-pocket: Up to $14,100
- Age 55 or older: Can pay an additional $1,000 as a catch-up contribution
The 2023 limits are expected to increase more than usual to account for inflation. For HSAs, those limits are $3,850 for an individual plan, or $7,750 for a family plan.
Flexible Spending Account
A flexible spending account (FSA) is a benefit you receive through your employer to set aside up to $2,850 in pre-tax dollars for qualified health and wellness expenses. The list of qualified expenses continues to grow, and now includes a wide range of costs. Here is a look at the complete list of eligible expenses.
One thing to keep in mind for your FSA: if you don’t use it, you lose (most) of it. Make sure that you’re using up that money by the end of the year because not all of it rolls over.
That being said, there is an FSA rollover and grace period for many plans. The rollover allows employees to move up to $570 into next year’s account, and the grace period allows up to 2.5 months into the new year to spend any remaining FSA money for this year.
401ks and Social Security
If you plan to max out your 401k plan this year, note that the 2022 limit increased an extra $1,000 to $20,500. And if you’re 50 or over, that number goes up to $27,000 after the additional $6,500 catch-up contribution. It is possible that those numbers could increase further for 2023 due to inflation, possibly up to $22,000. Those numbers will be released later this fall.
The taxable minimum amount also went up for social security, increasing from $142,800 in 2021 to $147,000 in 2022.
Roth and Traditional IRA Limits
For 2022, you can contribute up to $6,000 for your Roth and Traditional IRA accounts, or up to $7,000 if you’re age 50 or older.
You have until tax day to contribute to these accounts for 2022, which will be April 15, 2023.
2023 limits are expected to increase a bit more from inflation, rising to $6,500.
In 2022, the Simple IRA contributions are limited to $14,000. 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 2023, that contribution limit is expected to go up to $15,500.
The last day that employees can contribute to a Simple IRA is Dec. 31, 2022.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.