Contributing to your employer’s retirement plan is often the best way to accumulate retirement savings and for 2023 the amounts you can defer tax free will be increasing.
For 2023, the amount an individual can contribute to a 401(k), 403(b), and most 457 plans increase to $22,500, up from $20,500 in 2022. The catch-up contribution amount, for employees 50 and older who participate in these plans, increases to $7,500 from $6,500.
For IRA’s, the amount an individual can contribute increases to $6,500 (up from $6,000 in 2022). The catch-up contribution amount remains $1,000.
The maximum that can be saved in a SEP IRA will go to $66,000, up from $61,000 in 2022. SEP IRA contributions are employer contributions and are based on total earnings. A self-employed person can effectively contribute up to 20% of earnings of up to $330,000, up from $305,000 in 2022.
The amount individuals can contribute to their SIMPLE accounts increases to $15,500 (up from $14,000 in 2022). The catch-up contribution limit for SIMPLE account increases to $3,500 (up from $3,000).
Phase-out ranges and income caps
The IRS released new income phase-out ranges for making contributions to Roth IRA plans in 2023 as follows:
ROTH IRA ELIGIBILITY
|Filing Status||Full Deduction||Partial Deduction||No Deduction|
As always, should you have questions about this or any other topics related to your personal or business situation, please contact us at any time.
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