What are the new 2023 qualified retirement plan limits? We break down everything you need to know….(read more)

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As we enter a new year, it is important for individuals to stay updated on changes to retirement plan limits. For the year 2023, the IRS has announced new qualified retirement plan limits that will impact contributions and overall savings for individuals who participate in these plans.

One significant change for 2023 is the increase in the contribution limit for 401(k) plans. The maximum amount that an individual can contribute to their 401(k) has been raised to $21,000, up from $19,500 in 2022. This allows individuals to save more for their retirement and take advantage of the tax benefits that come with contributing to a 401(k) plan.

In addition to the increase in 401(k) contribution limits, there will also be changes to the annual additions limit for defined contribution plans. The total annual additions limit for defined contribution plans, which includes employer contributions, employee contributions, and forfeitures, has been raised to $61,000 in 2023, up from $58,000 in 2022. This change provides an opportunity for individuals to save more for their retirement through employer-sponsored plans.

For individuals with traditional and Roth IRAs, the contribution limit remains unchanged at $6,000 for 2023. However, the catch-up contribution limit for individuals age 50 and older has been raised to $1,000, allowing older individuals to save additional funds for their retirement.

Moreover, the income limits for deductible contributions to traditional IRAs and contributions to Roth IRAs have been adjusted for inflation. These limits will impact the eligibility of individuals to make contributions to their IRAs and will vary depending on the taxpayer’s filing status and modified adjusted gross income.

It is important for individuals to stay informed about these new retirement plan limits and to make adjustments to their savings strategies accordingly. Taking advantage of these changes can help individuals maximize their retirement savings and take advantage of the tax benefits of contributing to qualified retirement plans.

In conclusion, the new 2023 qualified retirement plan limits bring several changes that will impact the contributions and overall savings of individuals. By staying informed about these changes, individuals can make informed decisions about their retirement savings and take advantage of the opportunities to save more for their future. It is recommended for individuals to consult with a financial advisor or tax professional to ensure they are making the most of these new limits and optimizing their retirement savings strategies.