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.
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