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On October 21, 2022, the IRS announced the following changes for 2023:
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans increases to $22,500, up from $20,500.
The limit on annual contributions to an IRA increases 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 at $1,000.
The catch-up contribution limit—for employees 50 and older who participate in 401(k), 403(b), and most 457 plans—increases to $7,500, up from $6,500. Participants in 401(k), 403(b), and most 457 plans who are 50 and older can contribute up to $30,000, starting in 2023. The catch-up contribution limit for employees 50 and older who participate in SIMPLE plans increases to $3,500, up from $3,000.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2023.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s 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.) The phaseout ranges for 2023 are as follows:
For single taxpayers covered by a workplace retirement plan, the phase-out range increases to between $73,000 and $83,000, up from between $68,000 and $78,000.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to between $116,000 and $136,000, up from between $109,000 and $129,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range increases to between $218,000 and $228,000, up from between $204,000 and $214,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA increases to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000. For married couples filing jointly, the income phase-out range increases to between $218,000 and $228,000, up from between $204,000 and $214,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
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.
The amount individuals can contribute to their SIMPLE retirement accounts increases to $15,500, up from $14,000.
Details on these and other retirement-related cost-of-living adjustments for 2023 are in IRS Notice 2022-55.