Multiple Retirement Accounts?  Here's How the Contribution Limits Work for 2023

The IRS has announced substantial increases in the retirement account contribution limits for 2023. There are two separate limits that may be relevant for taxpayers: A $22,500 elective deferral limit and the overall deferral limit of $66,000. For clients with multiple company plans, the way these limits are applied can get confusing. The elective deferral limit limits all pre-tax and Roth contributions for the year, regardless of how many company plans the taxpayer participates in (after-tax contributions that are not considered Roth contributions don't count toward the limit if they are allowed under the terms of the plan). The overall deferral limit applies to every type of contribution, including pre-tax, Roth, employer matching contributions and non-Roth after tax contributions for the year. Clients aged 50 and older are also entitled to a separate $7,500 catch up contribution, which is added to the relevant base amount. For more information one the rules governing 401(k) contribution limits, visit Tax Facts Online. : Q 3728.