The IRS recently announced cost-of-living adjustments to pension and retirement fund contributions beginning in 2023. Contribution limits for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will rise to $22,500 from $20,500. The catch-up contributions for these funds for those aged 50+ will increase to $7,500 from $6,500. This means, beginning in 2023, those aged 50+ can contribute a combined amount of $30,000 toward the funds listed above.
Additionally, IRA contribution limits will increase to $6,500, up $500 from 2022. The IRA catch up contribution limit for individuals aged 50+ remains at $1,000.
The income phase-out range for taxpayers making contributions to a Roth IRA also will increase:
• Singles & Heads of Household: increasing to between $138,000 and $153,000 (up from between $129,000 and $144,000);
• Married couples filing jointly: increasing to between $218,000 and $228,000 (up from between $204,000 and $214,000).
Married individuals filing separate returns who make contributions to a Roth IRA are not subject to an annual cost-of-living adjustment and remain between $0 and $10,000.
Finally, the amount individuals can contribute to their SIMPLE retirement accounts will increase to $15,500, up from $14,000.
For more details about these and other upcoming retirement contribution-limit changes for the 2023 tax year, please read more on the IRS website.