401(k) and IRA Limits Have Increased in 2023! (Should You Invest More?)
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As we look ahead to the new year, financial experts are urging investors to consider increasing their contributions to their retirement funds. The reason? The limits for 401(k) and individual retirement account (IRA) contributions have increased for 2023.
The new contribution limit for 401(k) plans is $20,500, up from $19,500 in 2022. For those over the age of 50, the catch-up contribution limit has also increased from $6,500 to $7,000. Meanwhile, the contribution limit for traditional and Roth IRAs has risen from $6,000 to $6,500, with an additional catch-up contribution of $1,000 allowed for those age 50 and over.
These increased limits offer a valuable opportunity for investors to save more for retirement and take advantage of tax benefits. Contributions to 401(k) plans are made pre-tax, which lowers your taxable income for the year. This means that investing more in your 401(k) can help reduce your tax burden. In addition, many employers offer matching contributions, which help to grow your retirement savings even faster.
Traditional IRA contributions are also tax-deductible, while Roth IRA contributions are made with after-tax dollars but offer tax-free withdrawals in retirement.
However, it’s important to note that not everyone may be able to take advantage of the full contribution limit. Income limits can affect the ability to contribute to a traditional IRA, while Roth IRA contributions are subject to income limits as well. Similarly, some employers may have lower contribution limits or may not offer a matching program.
Despite these limitations, investors should still consider maximizing their contributions to these retirement accounts if possible. The earlier you start saving for retirement and the more you can contribute, the greater your chance of achieving financial security in your golden years.
In conclusion, the increased contribution limits for 401(k) and IRA accounts in 2023 offer a compelling reason to consider investing more in your retirement savings. By taking advantage of these increased limits, you can benefit from tax advantages and potentially receive matching contributions from your employer. So, start planning your retirement savings strategy now and take advantage of the opportunities available to secure a comfortable retirement in the future.
The 25% goal is of adjusted gross income I would imagine?
I would be retiring or working less in 5 years and I just want to know best how people split their pay, and how much of it goes into savings, spending or investments. I earn around $165K per year but have nothing to show for it yet.
When it hit my 401K limit of $20,500 last year I expected my contributions to automatically stop, but they did not. I actually started automatically making after tax contributions to my 401K. Is that something I need to be concerned about?
Considering the inflation I’m going to assume I’ll need to invest more now just to maintain the same quality of living I was saving for previously.
Up all ya $$$
Increase all mine, just in time for retirement
Actually it’s a tax later so you’ll feel better today to pay more, it’s how the long play investment is reversed
I may have exceeded my 401k amount in 2022 and not sure what happens if you do so. Any idea?
Congrats on the new In-N-Out headquarters coming to Franklin. More incentive for people to visit.
Can you guys do a video on how the Fed is literally forcing us to bend over and grab our ankles?
Can I still contribute to my 2022 Roth even though that year is over? I'm also confused because my account has an option to contribute into a 2024 Roth. Can you contribute that far ahead?
My wife is maxing out her Roth 403b, Roth 457, Family Health Saving Account, Pension contribution, and Family health insurance premiums. It is sad to say her paycheck take home pay is ZERO dollars for at least the first half of 2023….and yes her salary is over $100k……sad.
Yea if you can do it then do it cause if you are already maxing it out then why not try to again…plus with your Roth IRA you can just pull out the principal anytime if you need it but you won’t cause the order of operations with having 3-6 months of emergency fund
I’m behind so this is good news for me.
Personally I'm maxing mine, but I save nearly 100% of my income. Similar situation to the military where I live in government housing and have almost no expenses. The overflow after 401k and stuff just goes to other random investments. There will just be a little less overflow for me.
If you can do it, do it!
Lol, him mentioning that he is an Army Officer didn't really add to the question did it? But, with housing being paid for by Uncle Sam, and promotions/grade increases, definitely take the opportunity to try and max out as much as possible if you can. I like that the Money Guys emphasize having investments in non-retirement advantaged accounts as well so something to think about if you don't already have investments outside of the TSP. I hear that now they match 5% of contributions which is great. Unfortunately when I was in that was not offered. I wish I had maxed out mine throughout my service. I didn't grasp the power of compound interest back then 🙂 I sometimes wonder where my military TSP account would be now (outside of the current market dip) if I had done so?