What are the updated 2023 retirement contribution limits?
Retirement plan contribution limits for different retirement accounts are key in managing your future financial security. With this in mind, it’s important to stay abreast of changes that occur annually. As we approach 2023, the latest contribution limit updates will affect how much individuals and families can contribute to their retirement plans during the upcoming year. If saving for your post-career life is one of your goals, read on to understand more about all the current contribution limits that apply for 2023!
Let’s take a look at the 2023 retirement contribution limits for both traditional and Roth IRAs, as well as 401(k) plans.
2023 Retirement Contribution Limits
IRA (Individual Retirement Account)
2023 Retirement Contribution Limits: Traditional IRA
- For 2023, the annual contribution limit for Traditional IRAs is $6,500 if you are under 50. For those 50 and older, you can contribute an additional $1,000 catch-up contribution, bringing your total contribution to $7,500. Anyone with employment income (income subject to FICA) can contribute to a Traditional IRA. However, Traditional IRA contributions may or may not be tax-deductible depending on your income level and other factors (such as being an active participant in an employer-sponsored retirement plan)—be sure to consult with your financial advisor before making any contributions.
2023 Retirement Contribution Limits: Roth IRA
- The annual contribution limit for Roth IRAs is also $6,500 if you’re under the age of 50. For those 50 and older, you can contribute an additional $1,000 catch-up contribution, bringing your total contribution to $7,500.
- However, income limits may affect your ability to contribute t a Roth IRA.
- For single filers, you begin the phaseout of contributions at $138,000 of Modified Adjusted Gross Income (MAGI) and completely phased out once MAGI reaches $153,000.
- For joint filers, you begin the phaseout of contributions at $218,000 of Modified Adjusted Gross Income (MAGI) and completely phased out once MAGI reaches $228,000.
What is the max 401(k) Contribution for 2023?
- The 2023 maximum 401k contribution for Traditional and Roth 401k is $22,500. For those over the age of 50, you may contribute an additional $7,500 catch-up contributions for $30,000 total.
- Please note that you cannot maximize contributions to a Traditional 401k and a Roth 401k. The contribution limit is aggregate for both contribution types and total plans. (For example, if you hold two jobs offering a 401k plan, your maximum contribution between both plans is still $22,500 or $30,000 for those over age 50).
2023 Retirement Contribution Limits – Summary
- For 2023, the annual contribution limit for Traditional IRAs is $6,500 if you are under 50. For those 50 and older, you can contribute an additional $1,000 catch-up contribution, bringing your total contribution to $7,500.
- The annual contribution limit for Roth IRAs is also $6,500 if you’re under the age of 50. For those 50 and older, you can contribute an additional $1,000 catch-up contribution, bringing your total contribution to $7,500
- The 2023 maximum 401k contribution for Traditional and Roth 401k is $22,500. For those over the age of 50, you may contribute an additional $7,500 catch-up contributions for $30,000 total.
Saving for retirement should be a top priority for anyone looking to secure their financial future. Contributing to your retirement plan can mean more financial freedom later in life. Doing so allows you to take advantage of compounding interest and tax benefits, giving you an edge when you start withdrawing funds. It’s important to commit early, as the earlier you start contributing now, the more money you will have saved by the time 2023 rolls around.
Not sure where to start? Contact RCS to schedule a 15 min introduction call with one of our fiduciary financial advisors!