2023 IRS Retirement Plan Limits
Like the last couple of years, 2022 was another one full of ups and downs. I think many of us are looking forward to what the new year will bring! As 2022 comes to a close, it’s a great time to reassess our financial situation and planning considerations as we look into 2023. Each calendar year, the IRS adjusts contribution limits for retirement plans to account for inflation. As we look ahead, we again have some changes for 2023 retirement plan contributions.
Here are some of the more notable changes for 2023:
2023 Retirement Plan Limits for 401(k)/403(b)
Let’s start off with the most common plans. The limit is for 401(k) and 403(b) plans is $22,500 for 2023, up from $20,500 last year. If you are age 50 or older, you also are allowed a “catch up” contribution to encourage additional savings, which increases to $7,500 this year for a total maximum contribution of $30,000.
The other adjustment is to total contributions. The adjustment to the TOTAL limit for these plans has increased to $66,000 ($73,500 including catch up contributions) in 2023 from $61,000 ($67,500 including catch up contributions) in the previous year. These amounts include employer contributions, after-tax contributions, etc., and is the absolute maximum amount that can be contributed to these plans in a given year.
2023 Retirement Plan Limits for Traditional IRAs and Roth IRAs
Unlike the past couple of years, the IRS has increased the contribution limit for IRAs in 2023. In 2023, savers can contribute $6,500, up from $6,000 in previous years. There is also an additional $1,000 “catch-up” contribution available to those 50 and older. Please keep in mind that IRAs and Roth IRAs have income considerations, which have slightly increased for 2023, so be sure to review these income thresholds before making contributions.
2023 Retirement Plan Limits for HSAs
HSA savings account limits have increased again for 2023. Like previous years, the family plan maximum contributions have increased $450 in 2022 for a total of $7,750. Individuals also increased by $200 to a level of $3,850 for 2023.
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2023 Retirement Plan Limits for SEP IRAs
Business owners and self-employed individuals will be able to save a bit more this year as well. The maximum contribution to a SEP IRA increases to $66,000 in 2023, up from $61,000 in 2022. This maximum is subject to a percentage of income calculation as well.
2023 Retirement Plan Limits for SIMPLE IRA Plans
Employees with a SIMPLE IRA plan (typically used in smaller groups) will see an increase of $1,500 in 2023. The SIMPLE maximum contribution will now be $15,500 in 2023, up from $14,000 last year. SIMPLE IRA participants over age 50 are also eligible to save an additional $3,500 “catch-up” contribution, up from $3,000 in the previous year.
There are slight differences in 2023 for retirement contribution limits, so be sure to adjust your savings to take full advantage of your retirement accounts. Hopefully, 2023 is your best year yet, and we can all get back to a normal life after the challenges of the past several years!
If we can answer any questions about how this may relate to your financial plan, please get in touch with us below!