The IRS announced the 2023 retirement contribution limits on Friday. You can find the full release on the IRS website; here are some of the key takeaways from their release.
2023 Contribution Limits
- 401(k), 403(b), and 457 and TSP plans: $22,500 (increased from $20,500 in 2022)
- Traditional/Roth IRAs: $6,500 (increased from $6,000 in 2022)
- IRA catch-up contribution: remains at $1,000 (individuals 50 and over)
- 401(k), 403(b), 457 and TSP catch-up contributions: $7,500 (increased from $6,500 in 2022)
Income Phase-Outs
The income ranges for determining eligibility for several items increased for 2023. This includes deductible contributions for traditional IRAs, the ability to contribute to Roth IRAs, and claiming the Saver’s credit. Here are the phase-out ranges for 2023:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
Conclusion
Current inflation levels is one of the main drivers for the large increase in 2023 retirement contribution limits. If you can take advantage of the larger contribution limits, however, you can sock away extra $$$ for retirement AND shield yourself from taxes, either now or in the future. Now is a great time to meet with your CPA and your financial coach to determine what the appropriate numbers for your 2023 contributions should be. Don’t have a financial coach? Get on my calendar to see how I can help you, and make your plan for 2023 today!