How much can you contribute to your 401(k) in 2023? The amounts have increased significantly, so act fast to take full advantage of this change!

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Video Transcript…

Well, happy New Year, happy 2023, hopefully, your New Year is off to a great start.

One of my New Year’s resolutions is to make more videos, provide more good information that all of us can use to navigate whatever financial situation life throws at us. So I’m going to be making what I’m calling “Finance Friday”. I’m not sure if I want to promise to make the video every Friday, but it’ll probably be on Fridays where I’ll release just some quick financial tips, maybe it’s new information, or maybe it’s older information that isn’t fully understood. So, I want to just jump right into it.

I have a quick tip already for 2023, so here we go. For 2023, one of the changes is the amount that you’re able to contribute to your 401(k). Maybe you have a 403(b) or something just like it at work, but the maximum contribution amounts have changed for this year.

So last year, 2022, most people were able to contribute up to $20,500. Or if you were 50 or older, you could contribute an additional $6,500. So a total of $27,000 if you’re 50 or older last year.

This year (2023), they’ve adjusted both of those numbers. So everybody, even below the age of 50, can now contribute $22,500. And then if you’re above 50, the catch-up contribution that you’re able to make is an additional $7,500. So now the total as someone who’s older than 50 is $30,000 for the year that you’re able to save into your 401(k).

So, it’s always best just to jump on that as quick and as early in the year as you can. Maybe you got a raise from your employer or something as well and you can pack some of that away right now.

So just a quick tip, they’ve adjusted those numbers. If you’re trying to max out your 401(k) contributions, go adjust those now, and hopefully that I’ll set you up for success in the future….(read more)

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As of 2021, the maximum amount you can contribute to your 401(k) is $19,500. This amount is subject to change, however, and can be adjusted annually. So, if you’re wondering how much you can contribute to your 401(k) in 2023, the answer depends on a few factors.

The first factor is the rate of inflation. The IRS adjusts the contribution limits each year in order to keep up with the increasing cost of living. This means that the contribution limit could increase or decrease in 2023, depending on the rate of inflation.

The second factor is your income. If your income increases, you may be able to contribute more to your 401(k) in 2023. The IRS sets a limit on how much you can contribute based on your income. For example, if you make more than $125,000, you can only contribute up to $38,500 in 2021.

The third factor is the type of 401(k) plan you have. Some 401(k) plans have special rules that allow you to contribute more than the annual limit. For example, if you have a SIMPLE 401(k) plan, you can contribute up to $13,500 in 2021.

Finally, the fourth factor is the amount of money you have already contributed to your 401(k) in 2021. If you have already contributed the maximum amount allowed, you won’t be able to contribute any more in 2023.

Based on these factors, it’s difficult to predict exactly how much you can contribute to your 401(k) in 2023. However, you can get a good idea by looking at the current contribution limits and taking into account the rate of inflation and your income.