Worried about saving enough for retirement? You can put away more next year. The IRS has just announced the new retirement plan contribution limits for 2023.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan increases to $22,500, up from $20,500. For individuals 50 and older, the catch-up contribution limit goes to $7,500, up from $6,500. So, if you qualify for catch-up contributions you can contribute up to $30,000 next year.
IRA contributions move up to $6500 from $6,000. The catch-up contribution limit remains at $1,000.
Contributions to SIMPLE retirement accounts goes to $15,500, up from $14,000. The catch-up contribution limit for SIMPLE plans increases to $3,500, up from $3,000.
The income ranges for determining eligibility to make deductible contributions to traditional IRAs, Roth IRAs, and to claim the Saver’s Credit all increase in 2023.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) 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.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to:
- Between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000.
- For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
- The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is
- $73,000 for married couples filing jointly, up from $68,000
- $54,750 for heads of household, up from $51,000
- $36,500 for singles and married individuals filing separately, up from $34,000.
All details about the 2023 contribution limits are in IRS Notice 2022-55, available on IRS.gov.
