For 2022, the 401(k) contribution limit will increase to $20,500. The catch-up contribution for individuals 50 or older stays the same at $6,000.
The IRA contribution limit for 2022 will increase to $14,000. The catch-up contribution for individuals 50 or older remains the same, at $3,000.
The Social Security Administration announced that the 2022 Social Security wage base will be $147,000, an increase of $4,200 from 2021.
On January 1, 2022, the New Jersey minimum wage increases to $13.00 per hour. For seasonal and small employers (five or fewer employees) the minimum wage will increase to $11.90 per hour.
|New Year’s Day||January 1st*|
|Martin Luther King Day||January 17th|
|Washington’s Birthday||February 21st|
|Memorial Day||May 30th|
|Juneteenth National Independence Day||June 19th**|
|Independence Day||July 4th|
|Labor Day||September 5th|
|Columbus Day||October 10th|
|Veterans Day||November 11th|
|Thanksgiving Day||November 24th|
|Christmas Day||December 25th**|
*For holidays falling on a Saturday, the Federal Reserve Bank will be open the preceding day.
**For holidays falling on a Sunday, the Federal Reserve will be closed the following Monday.
As we begin the New Year, it is a good time to review your filing status. As life events occur, your tax status can change. To avoid any surprises when filing your personal taxes, it helps to review the status and make changes as needed.
Completing a W4 tells your employer how much tax to withhold from each check. This is a powerful form as it determines your tax bill for the year.
You are not required to complete a new W4 each year. This should be done if you want to adjust your withholding or if you start a new job.
If you are not sure what the best filing status is, it is best to talk to your tax preparer.
You can find the W-4 on our website, along with instructions regarding completing this form.
With all this talk about what the Fed intends to do and how it will affect you financially, it may be helpful to prepare for the eventuality of interest rate increases in 2022. Rate increases filter down to the public in a number of ways. Most obvious is the higher cost of borrowing money. Whether it is a home mortgage or a business loan, the interest cost would be greater. And the actual rate increase could end up even greater than the rise in treasury rates if the market feels the Fed is not finished raising rates.
As of December, the Wall Street Journal Prime rate is 3.25%. This rate is normally the first major index to change if the Fed acts. Will we see this rate go up dramatically? Probably not, but it was just two years ago that the prime rate was 5.75%. Is it likely to go up that high again? Probably not, at least in the next two years. It would be a good bet to take that the rate can go up two or three times in the next nine months —let’s say at least .25%. If that happens, we would be looking at a 4.00% prime rate in 12 months. Not too bad for the overall market.
What can you do to protect yourself from a rate increase? First, try to stretch out any business or personal debt payments you may have. If the option is available, choose fixed rate loans over variable rates. For consumers, that normally means taking a fixed-rate home equity loan instead of the variable rate line of credit. If you can pay down your credit cards, even if it means borrowing on your home, that can save substantially as credit card interest rates start to go up. If you were thinking of refinancing your home, do it sooner rather than later. It may make sense to cash out as much as you can on a 30 year basis. The extra funds can help pay off other debt if needed and 30 year rates are still very low.
If you are lucky enough to be banking with a small community bank, give someone there a call and talk to them about strategies to follow in a rising rate environment. They’ll be glad to help you and your business.
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Paper money is not made out of paper.
Though people commonly refer to bills as “paper” money, they actually aren’t made from paper. Instead, each bill is a combination of 75 percent cotton and 25 percent linen.