The IRS has updated contribution limits for retirement plans in 2023! It's nice to see that they adjusted these numbers with the high inflation we're seeing. Though small, these changes can help you save more in tax-friendly accounts for retirement. As always, please consult your tax advisor before making any changes. We would also love to have a conversation with you about these during your investment planning meeting.
Individual Retirement Accounts (IRAs)
Traditional IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500. This changes the monthly amount to maximize your IRAs from $500 per month to $541.66.
The income phase-out range for Roth IRA contributions increases to $138,000-$153,000 for single filers and heads of household, a $9,000 increase. For married couples filing jointly, phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.
Workplace Retirement Accounts
401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, the limit rising to $22,500. Those aged 50 and older will now have the ability to contribute an extra $7,500, bringing their total limit to $30,000.
SIMPLE IRAs will receive a $1,500 per year increase so the maximum is $15,500. The catch-up for those over 50 years old increase from $3,000 to $3,500 so those in the 50+ club can contribute a total of $19,000 for 2023.
These changes, while not life-changing are important for planning your investment and tax strategy for the year. Please consult a tax professional before making any changes and work with your financial planner to build a game plan for your investments.