6 New Retirement Numbers to Know for 2023

Slideshow October 24, 2022 at 02:45 PM Share & Print

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Related: 13 New Tax Numbers to Know for 2023

With inflation soaring, the Internal Revenue Service has raised the amount that individuals can contribute to their retirement accounts in tax year 2023.

The inflation adjustment “is an important calculation each year because it helps ensure that savings caps are adjusted to reflect the ever-present need to save more,” Lynn Dudley, senior vice president of global retirement and compensation policy at the American Benefits Council, told ThinkAdvisor on Monday in an email.

See the gallery for six of the cost-of-living adjustments for contributions to retirement accounts.

Melanie Waddell

@Think_MelanieW

NOT FOR REPRINT

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1. Saver’s Credit

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is:

$73,000 for married couples filing jointly, up from $68,000;
$54,750 for heads of household, up from $51,000; and
$36,500 for singles and married individuals filing separately, up from $34,000.

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2. Traditional IRA Deductibility Phase-Outs

Taxpayers can deduct contributions to a traditional IRA under certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income.

If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.

Phase-out ranges for 2023 are:

Single taxpayers covered by a workplace retirement plan — phase-out range increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
Married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan — phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered — phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
Married individual filing a separate return who is covered by a workplace retirement plan — phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

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3. DC Plans

The amount employees can contribute to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan increased $2,000 — to $22,500 from $20,500.

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4. SIMPLE IRAs

The amount individuals can contribute to their SIMPLE IRA jumped $1,500 — to $15,500 from $14,000.

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5. IRA Contributions

The limit on annual contributions to an IRA increased by $500 — to $6,500 from $6,000.

The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost of living adjustment and remains $1,000.

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6. Catch-Up Contributions

Employees 50 and older who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan can contribute $1,000 more next year, as the amount jumped to $7,500 from $6,500.

Participants in these plans who are 50 and older can contribute up to $30,000, starting in 2023.

The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased by $500 — to $3,500 from $3,000.

(Image: Adobe Stock)

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