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VIEWpoint Issue 1 | 2023
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The Internal Revenue Service (IRS) recently announced that the amount individuals can contribute to their 401(k) plans in 2023 is $22,500, up from $20,500 in 2022. Doeren Mayhew’s individual tax advisors highlight the changes for 2023 so you can be prepared for your retirement savings in the coming year.
Below are additional changes made:
In addition to 401(k) plans, the contribution limit for employees participating in 403(b), most 457 plans and the federal government’s Thrift Savings Plan is also $22,500.
The limit for annual contributions to an individual retirement arrangement (IRA) is now $6,500, up from $6,000 in 2022. The IRA catch-up contribution limit for individuals aged 50 and up is not subject to an annual cost-of-living adjustment, and therefore, remains at $1,000.
For individuals aged 50 and over participating in a 401(k), 403(b), most 457 plans and the Thrift Savings Plan, the catch-up contribution limit increased to $7,500, up from $6,500. As a result, starting in 2023, individuals aged 50 and up can contribute up to $30,000.
The catch-up contribution limit for employees aged 50 and over participating in SIMPLE retirement plans is now $3,500, up from $3,000. The amount individuals can contribute to this plan is $15,500, up from $14,000.
The income threshold for determining eligibility to make deductible contributions to IRAs, contribute to Roth IRAs and claim the Saver’s Credit all increased for 2023. Individuals may deduct contributions to a traditional IRA if they meet certain criteria. If a taxpayer or their spouse was covered by a retirement plan, the deduction may be reduced or phased out until it’s eliminated, depending on income and filing status.
The phase-out ranges for 2023 are as follows:
The income phase-out ranges for taxpayers making contributions to a Roth IRA are as follows:
The income limits for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low and moderate-income workers are as follows:
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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