401k and IRA limits will increase next year

Last month, the IRS published new limits for 401k and IRA contributions in 2023.

For 401k and similar plans:

“The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500, up from $20,500.”

If you are over 50 and have a 401k or similar plan:

“The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $7,500, up from $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000, starting in 2023.”

For IRA’s:

“The limit on annual contributions to an IRA increased to $6,500, up 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.”

Dis you know there is a Saver’s Credit that can reduce your taxes if you have low to moderate income? This is to help you save for retirement.

“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.”

Here’s more info on the Saver’s Credit.

“The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.”

If you are planning for retirement, consider the Paradox of Stress vs Tranquility. This is a great post by Matt Schnuck on LinkedIn.

Sincerely yours,

smilingdad

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