With inflation and interest rates on the rise this year, combined with the erratic state of the stock market, it’s more important than ever to create a solid financial plan that includes saving for retirement. Below are important dates you need to know on how to start retirement planning for 2022. You’ll also see a few strategies you can use to wrap up your 2021 taxes (such as opening and funding certain IRAs by April 18 to count for 2021) that may impact your 2021 tax bill.
The information below applies to typical retirement accounts and for self-directed retirement plans.
Income Tax Deadlines in 2022
The IRS officially began accepting 2021 tax returns on January 24, 2022.
- April 18, 2022: Deadline to file your taxes
The official deadline for most taxpayers to file federal income tax returns for 2021 (or to file an extension) is Monday, April 18, 2022 (due to the Emancipation Day holiday celebrated in Washington D.C. on Friday, April 15th). However, taxpayers who live in Maine or Massachusetts, have until April 19, 2022, because those states celebrate Patriots Day as a holiday on April 18th.
- October 17, 2022: Deadline to file taxes if you got an extension
The due date to file taxes if you got an extension. If you plan to file for an extension, the deadline to do so is April 18th.
- Due dates for quarterly taxes in 2022:
1Q: April 18
2Q: June 15
3Q: September 15
4Q: January 17, 2023
How to Start Retirement Planning for 2022
If you haven’t opened a retirement account yet, there’s no better time like the present! The earlier you begin to save, the longer the benefits of compound interest in the account work for you—along with potential returns the account garners over the years until you retire. It is easy to learn how to start retirement planning for 2022, keeping these dates and provisions in mind. Plus, you still have time to open and contribute to some accounts and apply those contributions to 2021 to help lessen your tax burden when applicable.
Traditional and Roth IRAs
Traditional and Roth IRAs are plans designed for individuals to save for retirement. The main difference in these plans is that contributions to a traditional IRA are made with pre-tax dollars (meaning your distributions in retirement are taxed) and contributions to a Roth are post-tax (so distributions when you retire are not taxed).
- April 18, 2022:
Deadline to set up and fund a traditional or Roth IRA and designate contributions to count for 2021.
- Contribution limits:
The 2021 and 2022 contribution limits for both plans are $6,000 a year, with an additional $1,000 catch-up contribution if you’re 50 and older.
Simplified Employee Pension (SEP IRA)
A SEP IRA makes saving for retirement easy for the self-employed or businesses with few employees. The annual contribution limit is higher than other IRAs, which allows significant savings and more capital in the account to invest.
- April 18, 2022:
The last day you can open and contribute to a SEP IRA to count for 2021 taxes unless you file an extension.
- October 17, 2022:
If you filed an extension, this is the last day you can open and contribute to a SEP IRA for 2021.
- Contribution limits:
Annual contributions are considerable. For 2021, you can contribute the lesser of (up to) $58,000 or 25 percent of your annual compensation. In 2022, you can contribute the lesser of (up to) $61,000 or 25 percent of your compensation.
Savings Incentive Match Plan for Employees (SIMPLE IRA)
The SIMPLE IRA is a great plan for small business owners or for those who are self-employed. You can make contributions as an employee and as an employer.
- October 1, 2022:
This is the deadline to set-up a SIMPLE IRA for 2022. (This plan does not offer an extended period to set up in 2022 and count towards 2021.)
- Contributions:
Employees make contributions of up to $14,000 in 2022 through pre-tax salary deferrals, with an additional $3,000 catch-up contribution for those 50 and older. Employers make a matching contribution of 1-3 percent of the employee’s annual compensation, which can help lower your business tax liability.
Solo 401(k) Plan
The solo 401(k) plan is perfect for self-employed people or for small business owners with no full-time employees other than themselves and their spouses or partners. You can make contributions to your plan as an employee and as an employer.
- March 15, 2022:
Deadline for S-Corps (plus extensions) to establish and contribute to a solo-k for 2021.
- April 18, 2022:
Deadline for C-Corps and sole proprietorships (plus extensions) to open and contribute to the plan to count for 2021 taxes.
- Contributions:
Your employee elective salary deferral contribution limit for 2022 is $20,500, with a catch-up contribution of $6,000 if you’re 50 or older). The employer profit-sharing contribution can be up to 25 percent of your self-employed earnings.
Employers have until their corporate filing date (including extensions) to establish and contribute to a solo-k to count for 2021 tax returns. However, if you have employees who are eligible to contribute, your plan must be established by 12/31 of the tax reporting year for them to make final salary deferrals for that year. Because rules governing these plans recently changed, consult with your CPA to ensure proper planning to maximize both employee and employer contributions.
Note on required minimum distributions from retirement plans:
If you’re over 72 and own a traditional, SIMPLE or SEP IRA or a solo 401(k), you must take required minimum distributions every year.
- December 30, 2022:
This is the deadline to take your RMDs from these plans for 2022. Normally, you have until the 31st, but this year the 31st falls on a Saturday.
Health Savings Account (HSA)
A health savings accounts (HSA) is not a retirement plan, but they are incredible tax-sheltered savings plans designed to help you pay for qualified medical expenses. To participate in an HSA, you must have a high-deductible health plan (HDHP) and have no other health insurance in place.
- April 18, 2022:
You have until April18th to make an HSA contribution count for 2021 (plus extensions) and you have until April 15, 2023 to make contributions that count towards your 2022 income tax return.
Note: You must establish your HDHP by December 1 to make HSA contributions for the following year.
So, to make HSA contributions in 2022, your account should have been set up by December 1, 2021. If you missed that deadline, be sure to open one by December 1, 2022 to contribute in 2023.
- Contributions:
The 2021 contribution limits are $3,600 for individuals or $7,200 for families. For 2022, individuals can contribute $3,650 and families can contribute $7,300.
Education Savings Account (ESA)
ESAs also aren’t retirement plans, but it is an excellent tax-sheltered account that allows you to save for your child’s education.
- April 18, 2022:
This is the deadline to make a contribution to an ESA to count for 2021.
- Contributions:
Contributions to ESAs are the same for 2021 as they are for 2022. You may contribute no more than $2,000 into the account.
Pro Tip: Open a Self-Directed IRA and Invest in Alternative Assets
If you want to retire and live the lifestyle you desire, it’s crucial to learn how to start retirement planning for 2022 and to continue your planning in the years to come. Self-directed IRAs and other savings plans have the potential to significantly impact your ability to acquire retirement wealth. Self
When you self-direct, you choose your own assets, and you can invest in a myriad of investment opportunities that you personally know and understand. Things like real estate, private equity, private lending, cryptocurrency are examples of just a few of the many alternative investments that are not dramatically dictated by the ups and downs of the stock market.
To learn more about the different types of self-directed retirement and savings plans, contact Advanta IRA today.
Additional reading:
Retirement Planning Strategy for 2022: Resolve to Get Involved
What Is Private Equity and How Can I Invest with My IRA?
Why Consider a Self-Directed Health Savings Account?
