Tax Byte
IRS Announces Boost for Retirement Contributions in 2023
The IRS on October 21 issued Notice 2022-55, providing cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2023 tax year.
Highlights
Notably, the IRS last Friday announced that the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500 – up from $20,500 for 2022.
Further, the limit on annual contributions to an IRA increased to $6,500 in 2023, 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 adjustment and remains $1,000.
And 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 (TSP) is increased to $7,500, up from $6,500. Accordingly, these same participants in 401(k), 403(b), most 457 plans, and the federal government’s TSP who are 50 and older can contribute up to $30,000, starting in 2023. After groceries and gas, of course.
Additional changes can be reviewed in Notice 2022-55.
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