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2023 IRA and 401(K) Contribution Limits

2023 IRA and 401(K) Contribution Limits

October 24, 2022

Great news! The Internal Revenue Service announced it would raise the 401(k) contribution limit by 9.8 percent. The maximum IRA contribution for 2023 will rise $500, to $6,500, an 8.3% increase.

Starting in 2023, Americans can contribute as much as $22,500 into 401(k), 403(b), the federal government’s Thrift Savings Plan, and most 457 retirement plans, according to the IRS’s announcement. That’s $2,000 more than the current contribution limit of $20,500, it said.

In November 2021, the IRS raised the contribution limit by $1,000 for 2022 to the current $20,500, up from $19,500 for 2021 and 2020.

Meanwhile, the IRS raised the limit on annual contributions to an IRA from $6,000 to $6,500 in 2023. The IRA catch‑up contribution limit for individuals aged 50 and above will not be subject to the annual l cost‑of‑living adjustment and remains at $1,000.

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.

Let’s schedule a meeting to discuss further or set up an IRA plan that meets your needs.