The contribution limits for 2023 show a 7-11 percent increase for most contributions, reflecting the soaring inflation in our current economy. Here are some key increases to note.
The annual contribution limit for 401(k), 403(b), and most 457 plans is increased from $20,500 to $22,500. Participants aged 50 or older can contribute an additional $7,500 next year, an increase of $1,000 from 2022. This means that employees over the age of 50 can contribute up to $30,000 in total to their 401(k). Catch-up contribution limit for employees over 50 who participate in SIMPLE plans is now $3,500.
For both traditional IRAs and Roth IRAs, individuals can contribute $6,500 to their IRAs, up from $6,000 in 2022.
You can reference the chart below for a detailed list of all contribution limits as compared to 2022 and 2021.
It is important to remember that annual contribution limits should be viewed as a contribution goal. Whether you need to contribute more money to your 401(k) or IRA depends on your unique financial situation. Contributing as much as you are able, consistently, is how you can put your best foot forward, regardless of your actual contribution amount. Use the limits to analyze your current retirement savings contributions and adjust if necessary, so you can take one step closer to meeting your financial goals. If you have any questions, RPCSI is here to help!
