The 2023 IRS Contribution Limits: What You Need to Know

The Internal Revenue Service has released new limits for the coming year, and after months of high inflation and financial uncertainty, some of these cost-of-living-based adjustments have reached near-record levels.

Individual Retirement Accounts (IRAs) – 2023 Contribution Limits

IRA contribution limits for 2023 have been increased by $500, bringing the total limit to $6,500. If you’re over age 50, you can still make catch-up contributions of $1,000, allowing you to contribute up to $7,500 in total.

Roth IRAs – Updated Income Phase-out Ranges

Good news for Roth IRA contributors! The income phase-out range for 2023 has been raised to $138,000-$153,000 for single filers and heads of household, increasing by $9,000. For married couples filing jointly, the phase-out range is now $218,000 to $228,000, a $14,000 increase. Married individuals filing separately will see their phase-out range remain at $0-10,000.

Workplace Retirement Accounts

If you have a 401(k), 403(b), 457 plan, or a similar account, you’ll be pleased to know that the contribution limit for 2023 has increased by $2,000, reaching $22,500. Individuals aged 50 and older can now contribute an additional $7,500, raising their total limit to $30,000.

SIMPLE Accounts – Increased Limits for 2023

Contributing to a SIMPLE account in 2023? You can now contribute up to $15,500, thanks to a $1,500 increase in the limits.

Other Changes for 2023

Apart from changes in contribution limits, the IRS has also announced other adjustments for 2023. These include an increase in the annual exclusion for gifts to $17,000 per person and an increase in the estate tax exclusion threshold.

Please remember that the information provided here is for informational purposes only. It’s essential to consult with your tax professional before making any changes based on the new 2023 levels. If you need more information about the pending changes, feel free to contact our office.

By Marcus E. Ortega, ChFC, RFC | Investment Advisor Representative | CEO of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.

Photo by Marc Najera on Unsplash.