A 60-second read by the Baron Team: Below is a summary of the upcoming 2023 changes to retirement plan contribution limits:
On October 21, 2022, the IRS announced that the contribution limit for 401(k), 403(b), many 457 plans, and the federal government’s Thrift Savings Plan has increased to $22,500 for 2023.
Additionally, the catch-up contribution limit for 401(k) plans has increased to $7,500 up from $6,500 for individuals over 50 years old.
Inclusive of the catch-up contribution, the limit for 401(k), 403(b), many 457 plans, and the federal government’s Thrift Savings Plan participants that are 50 and older can contribute a maximum of $30,000 in the year 2023.
The limit on annual contributions to an IRA account has increased to $6,500 from $6,000. The catch-up limit for IRA accounts remains $1,000 for individuals 50 and older.
The phase out ranges increased for taxpayers who are covered by a workplace retirement plan and are also making contributions to an IRA. For single taxpayers the phase-out range has increased to $73,000 and $83,000; for married couples filing jointly the phase-out range is between $116,000 and $136,000.
The change in phase-out range for Roth IRA contributions is increasing to $138,000 and $153,000 for single taxpayers; for married couples filing jointly the phase-out range has increased to between $218,000 and $228,000.
For anyone wanting to make changes, they may want to do it before year-end so that it takes effect for all of 2023. Here are some other financial actions to consider at year-end.
Please see the IRS website for additional information.
Disclosure: This is a general communication being provided for informational purposes only. This material is not intended to be relied upon as a forecast, research, legal, tax or investment advice. Please consult your financial planning and tax professional for personal advice.