IRA and Retirement Plan Limits for 2023
How much are you saving for retirement? It’s essential to know how much you can contribute to your IRA, Roth IRA and employer retirement plans. Limits can change year to year. Read on to see what’s changed in 2023.
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2023 is $6,500 (or 100% of your earned income, if less), up $500 from 2022. The maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2023, but your total contributions can’t exceed these annual limits.
Can you deduct your traditional IRA contributions?
If you (or if you’re married, both you and your spouse) are not covered by a work-based retirement plan, your contributions to a traditional IRA are generally fully tax deductible.
If you’re married, filing jointly, and you’re not covered by an employer plan but your spouse is, your deduction is limited if your modified adjusted gross income (MAGI) is between $218,000 and $228,000 (up from $204,000 and $214,000 in 2022) and eliminated if your MAGI is $228,000 or more (up from $214,000 in 2022).
For those who are covered by an employer plan, deductibility depends on income and filing status. If your filing status is single or head of household, you can fully deduct your IRA contribution in 2023 if your MAGI is $73,000 or less (up from $68,000 in 2022). If you’re married and filing a joint return, you can fully deduct your contribution if your MAGI is $116,000 or less (up from $109,000 in 2022). For taxpayers earning more than these thresholds, the following phaseout limits apply.
Can you contribute to a Roth IRA?
The income limits for determining whether you can contribute to a Roth IRA will also increase in 2023. If your filing status is single or head of household, you can contribute the full $6,500 ($7,500 if you are age 50 or older) to a Roth IRA if your MAGI is $138,000 or less (up from $129,000 in 2022). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $218,000 or less (up from $204,000 in 2022). For taxpayers earning more than these thresholds, the following phaseout limits apply.
How much can you save in a work-based plan?
If you participate in an employer-sponsored retirement plan, you may be pleased to learn that you can save even more in 2023. The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan will increase to $22,500 in 2023. This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $7,500 to these plans in 2023 (up from $6,500 in 2022). [Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.]
The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) will increase to $15,500 in 2023, and the catch-up limit for those age 50 or older is now $3,500, up from $3,000 in 2022. Note: Contributions can’t exceed 100% of your income.
If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($22,500 in 2023 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can save the full amount in each plan — a total of $45,000 in 2023 (plus any catch-up contributions).
If you have questions about how these limits affect you and your retirement planning, contact a CFS* Wealth Management Advisor today. Please give us a call at 303.443.4672 x2240 to set up a no-obligation appointment to discuss your options further.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Elevations Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
CUSO Financial Services, L.P. (CFS) does not provide tax or legal advice. For such guidance, please consult your tax and/or legal advisor.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2022.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.