Increased 401(k) and IRA Contribution Limits
Speaking of tax sensitivity, the Internal Revenue Service announced cost of living adjustments for contributions to most retirement accounts. The contribution limit for employees who participate in 401(k)s, 403(b)s, most 457 plans and the federal government’s Thrift Savings Plan has increased to $22,500 (up from $20,500). The limit on annual contributions to an IRA increased to $6,500, up from $6,000.
The catch-up contribution limit for employees 50 and older in 401(k)s, 403(b)s, most 457 plans and Federal TSP plans increased to $7,500, up from $6,500. For those who participate in SIMPLE plans, it increased to $3,500, up from $3,000. The IRA catch-up contribution limit for individuals 50 and older is not subject to an annual cost-of-living adjustment and remains $1,000, the IRS said.
There were also increases in income ranges for determining eligibility to make deductible contributions to traditional IRAs, and to contribute to Roth IRAs in 2023.