The Internal Revenue Service (IRS) has raised the limits for retirement contributions, and some of these cost-of-living-based adjustments have reached near-record levels. Here are five examples of what the new limits are for 2023.
- Traditional and ROTH Individual Retirement Accounts (IRAs) - IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500.
- Roth IRAs - The income phase-out for Roth IRA contributions will increase by $9,000 to a range of $138,000-$153,000 for single filers and heads of household. For married couples filing jointly, the phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately will see no change to their phase-out range of $0-10,000 .
- Workplace Retirement Accounts - Those with 401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, with the limit rising to $22,500. Those aged 50 and older will have the ability to contribute an extra $7,500, bringing their total limit to $30,000.
- SIMPLE Accounts - A $1,500 increase in limits for 2023 gives individuals contributing from their salary to this incentive match plan a $15,500 maximum.
- Simplified Employee Pension Accounts (SEP IRA) - The IRS increased the 2023 SEP limit to $66,000 which is an increase of $5,000 from 2022.
There are also several other changes the IRS has made that can impact your assets and taxation. For one, the IRS also announced a $1,000 increase to the annual exclusion for gifts, making it $17,000 per person. Also, the new federal estate tax exclusion threshold will also be increased in 2023 to $12,920,000.
Keep in mind that we provide updates for informational purposes only
May you enjoy planning for 2023!
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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