401(k) And IRA Limits Increased For 2023
In 2022, taxpayers who wanted to contribute to 401(k) plans could only contribute up to $20,500. Similarly, the contribution limit for annual contributions to IRAs was capped at $6,000. However, due to a recent change put in place by the IRS, these numbers have been increased for 2023.
Contribution Limits for 401(k)s
The IRS recently confirmed that the contribution limit for employees who participate in 401(k) plans is now $22,500, up from $20,500 in 2022. This increase also applies to employees looking to participate in 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan. The catch-up contribution limit for employees who are over the age of 50 years old and who participate in one of these plans has also gone up by $1,000 to $7,500. This means that qualifying taxpayers can contribute up to $30,000 starting next year.
Contribution Limits to IRAs
The limit on yearly contributions to IRAs also went up from $6,000 in 2022 to $6,500 for 2023. The IRA catch-up contribution limit for taxpayers over the age of 50 years old, however, is not subject to an increase, but remains at $1,000. The income ranges for determining eligibility to make deductible contributions to IRAs, Roth IRAs, and to claim the Saver’s Credit also increased for 2023.
IRA Phase-Out Ranges for 2023
Taxpayers can deduct contributions to an IRA only if they meet certain conditions. If, for instance, either a taxpayer or his or her spouse is covered by a retirement plan at work, then the deduction can be phased out, until it is eliminated. The phase-out ranges for 2023 are as follows:
- Between $73,000 and $83,000 (up from between $68,000 and $78,000 in 2022) for single taxpayers who are covered by a workplace retirement plan;
- Between $116,000 and $136,000 (up from between $109,000 and $129,000) for married couples who file jointly and the spouse making the contribution is covered by a workplace retirement plan;
- Between $218,000 and $228,000 (up from between $204,000 and $214,000) for IRA contributors who aren’t covered by a workplace retirement plan, but are married to someone who is; and
- Between $0 and $10,000 for married taxpayers who file separate returns and who are covered by a workplace retirement plan.
The income phase-out range for taxpayers who make contributions to Roth IRAs also increased to:
- Between $138,000 and $153,000 for singles and heads of household (up from between $129,000 and $144,000);
- Between $218,000 and $228,000 (up from between $204,000 and $214,000) for married couples who file jointly; and
- Between $0 and $10,000 for married taxpayers who file separate returns and who make contributions to a Roth IRA.
Finally, the income limit for the Saver’s Credit increased for low and moderate income workers to $73,000 for married couples filing jointly, $54,750 for heads of household, and $36,500 for singles and married individuals who file separately.
Speak with Dedicated Tax Attorney Ronald Cutler, P.A. Today
To learn more about the contribution limits for 401(k) and IRA accounts, please call CPA, former FBI Special Agent, and experienced Florida tax attorney Ronald Cutler, P.A. at 386-490-9949 today.