Each year, we urge you to stash as much money as possible in your qualified retirement plan. Making the maximum contribution to your account is not only the best way to continue preparing for a stable retirement; you can also earn a significant savings on your federal income taxes. So why not take advantage of both opportunities at once?
And now for some even better news: In 2023, you’ll be able to contribute a bit more to your retirement plan.
The IRS regularly increases contribution limits to account for changes in the economy and how we prepare for retirement. In 2023, the annual limit on contributions to retirement accounts like 401k, 403b, Thrift Savings Plan, and most 457 plans was raised to $22,500. That means you can save $22,500 toward your retirement on a pre-tax basis (meaning you won’t owe income taxes on the amount of your contribution).
And for those aged 50 and over, the annual catch-up contribution limit for the above accounts has been raised from $6,500 to $7,500. That figure represents an additional amount that you could potentially contribute toward retirement savings, plus yet another tax advantage.
For IRAs, the annual contribution limit was raised from $6,000 to $6,500, giving those savers a little boost as well. Catch-up contributions to IRAs are not adjusted for cost of living, and so will remain at $1,000 for the year.
For information on adjusting your contributions (which is most easily done via automatic deductions from your paychecks) give us a call. We should review your savings strategy and help you contribute as much as possible to your retirement plan each year.