IRS Announces 2023 Retirement Plan Contribution Limits
The IRS announcement of 2023 retirement plan contribution limits reflects the rising cost of living.
On October 21, 2022, the Internal Revenue Service (IRS) announced the 2023 limitations on benefits and contributions that individuals can make to a qualified retirement plan.
Key contribution plan limit adjustments are shown in the chart below. To read the full announcement, see: Notice 2022-55: 2023 Limitations Adjusted as Provided in Section 415(d), etc.
Important takeaways include increases in almost every category in the amounts workers can save for retirement through their individual retirement account (IRA) or qualified retirement plan contributions driven by Cost-of-Living Adjustments COLA.
IRS 2023 Retirement Plan Contribution Limits: Key Takeaways
|Social Security taxable wage base||$147,000||$160,200|
|Key employee in top-heavy plan salary definition||$200,000||$215,000|
|Highly compensated employee salary definition||$135,000||$150,000|
|Maximum annual benefit earned under a defined benefit plan [IRC Section 415 limit]||$245,000||$265,000|
|Maximum contribution to a participant’s account in one or more defined contribution plans [IRC Section 415 limit]||$61,000||$66,000|
|Maximum salary deferral – 401(k)/403(b) plans [IRC Section 402(g) limit] and most 457 plans||$20,500||$22,500|
|Maximum salary deferral – SIMPLE 401(k) plans||$14,000||$15,500|
|Minimum compensation amount – Simple Employee Pension Plan (SEPs)||$ 650||$ 750|
|Maximum compensation amount – 401(a) plans, 403(b) plans, and SEPs||$305,000||$330,000|
|Age 50 catch-up contribution – 401(k) plans, 403(b) plans, and 457(b) governmental plans||$6,500||$7,500|
|Catch-up contribution – SIMPLE 401(k) plans||$3,000||$3,500|
Compare to previous retirement plan contribution limits: IRS Contribution Limits 2022 Deep Dive: What’s Most Important to Know and IRS Announces Retirement Plan Contribution Limits for 2021
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.
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