Posted on 10/21/22
| News Source: WSJ
Millions of Americans can save more in tax-advantaged retirement accounts next year, after inflation adjustments made Friday by the Internal Revenue Service.
The employee contribution limit for 401(k) and similar workplace plans will jump $2,000 to $22,500 for 2023, the largest increase ever in terms of dollars and percentage, according to benefits provider Milliman.
The amount taxpayers can contribute to an individual retirement account will be $6,500 for 2023, up from $6,000. The limit hasn’t changed since 2019.
The 401(k) catch-up contribution amount allowed if you’re 50 or older will rise $1,000 to $7,500 for 2023. The catch-up contribution limit for individual retirement accounts, which isn’t subject to inflation adjustments, remains at $1,000.
For workers at companies that allow special after-tax contributions, and self-employed folks who have individual 401(k)s or SEP retirement plans, there is a total $66,000 plan contribution limit for 2023, up $5,000 from this year. That includes employee and employer contributions. With catch-up contributions on top, older savers can contribute up to $73,500 in 2023 to these plans.