If you’re eager to save more for retirement in 2023, there’s good news from the IRS, which just announced higher limits for your annual 401(k) plan and individual retirement account contributions.
The employee contribution limit for 401(k) plans is increasing to $22,500 in 2023, up from $20,500, and catch-up deposits for savers age 50 and older will jump to $7,500, up from $6,500. The new amounts also apply to 403(b) plans, most 457 plans and Thrift Savings Plans.
The agency has also increased contribution limits for IRAs, allowing investors to save $6,500 in 2023, up from $6,000 in 2022. The catch-up deposit will remain at $1,000.
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The boost for IRA contributions is significant, as the cap hasn’t changed since 2019, limiting savings for Americans without a workplace retirement plan.
And more Americans may also qualify for Roth IRA contributions, with the adjusted gross income phaseout range rising to between $138,000 and $153,000 for single filers and $218,000 and $228,000 for married couples filing jointly.
Income ranges have also increased to qualify for the retirement savings contributions credit and the ability to deduct pre-tax IRA deposits with a workplace plan.
This week, the IRS released dozens of inflation adjustments for 2023, including higher income tax brackets, increased standard deductions, bigger estate tax exclusions, larger income brackets for capital gains and more.