401(k) — Limits Increased

Next year (2023), the contribution cap for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan (TSP) is going up by almost 10 percent.

Here’s what you need to know about the new limits coming in 2023.

• The contribution limit for workplace retirement accounts is increasing to $22,500in 2023, up from $20,500.
• For IRAs, the annual contribution limit jumps from $6,000 to $6,500.
• If you’re 50 or older, you’ll be able to contribute an extra $7,500 in 2023, compared with the current $6,500.

If you or your spouse are covered by a retirement plan at work, your IRA deduction may be reduced or phased out depending on your filing status and income.

Here are some of the changes for 2023, as laid out by the IRS.

• For single taxpayers covered by a workplace retirement plan, the new phaseout range is $73,000 to $83,000, up from the current $68,000 to$78,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phaseout range will be $116,000 to $136,000 in 2023, up from $109,000 to $129,000.
• For an individual not covered by a workplace retirement plan butmarried to someone who is, the phaseout range for an IRA will go from$218,000 to$228,000, up from $204,000 to$214,000.
• The income phaseout range for taxpayers making contributions to a Roth IRA is increasing to between $138,000 and$153,000 for singles and heads of household, up from $129,000 to$144,000. For married couples filing jointly, therange is$218,000 to $228,000, compared with $204,000 to$214,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phaseout range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000. The same phaseout range applies to a married individual filing a separate return who makes contributions to a Roth IRA.