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Investors will be able to contribute up to $22,500 in 401(k) plans and $6,500 in IRAs in 2023
KEY POINTS
- The IRS has raised the 401(k) plan contribution limits for 2023, allowing employees to contribute up to $22,500 to workplace plans in 2023, up from $20,500 in 2022.
- Individual retirement account deposit limits will also be raised to $6,500 from $6,000.
If you want to save more for retirement in 2023, the IRS has just announced higher limits for annual 401(k) plan and individual retirement account contributions.
Employee contributions to 401(k) plans will increase to $22,500 in 2023, up from $20,500, and catch-up deposits for savers 50 and older will increase to $7,500, up from $6,500. The new amounts are also applicable to 403(b) plans, the majority of 457 plans, and Thrift Savings Plans.
In addition, the agency increased IRA contribution limits, allowing investors to save $6,500 in 2023, up from $6,000 in 2022. The catch-up deposit of $1,000 will remain unchanged.
The increase in IRA contributions is significant because the cap hasn’t changed since 2019, limiting savings for Americans who don’t have a workplace retirement plan.
Furthermore, more Americans may be eligible for Roth IRA contributions, with the adjusted gross income phaseout range increasing to between $138,000 and $153,000 for single filers and between $218,000 and $228,000 for married couples filing jointly.
The income ranges for qualifying for the retirement savings contribution credit and the ability to deduct pre-tax IRA deposits with a workplace plan have also increased.
The IRS released dozens of inflation adjustments for 2023 this week, including higher income tax brackets, increased standard deductions, larger estate tax exclusions, higher capital gains income brackets, and more.
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