Retirement Account Tax Inflation Adjustments for Year 2023

The IRS announced the 2023 inflation-adjusted dollar-amount ceilings and thresholds for a wide range of qualified retirement plans and accounts, including traditional individual retirement arrangements (IRAs) and Roth IRAs.

The IRS set $22,500 as the amount that individuals can contribute to Sec. 401(k) plans in 2023, up from $20,500 for 2022. The increase also applies to Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan.

The limit on annual contributions to an IRA increased to $6,500, up from $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living (COLA) adjustment and remains $1,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $7,500, up from $6,500. This means that, starting in 2023, these same participants can contribute up to $30,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased to $3,500, up from $3,000.

Questions? Contact your accounting professional or email us at info@hfco.com

Source: www.irs.gov