Time to boost your 2023 retirement contributions!

The new year brings new IRS retirement contribution limits, which means the opportunity to contribute more toward your retirement through annual limit increases and catch-up contributions.

Regardless of how much you can put towards retirement, this is an important time of year to review your current contributions and identify if there is an opportunity to contribute more.

Below are a few important contribution limit changes for 2023:

2023 Contribution Limit Increases

• Traditional IRA and Roth Contribution limits have increased from $6,000 to $6,500. Those 50 and over still have a $1,000 contribution catch-up limit.
• The basic salary deferral amount for 401(k) and similar workplace plans is $22,500, with a $7,500 catch-up amount for those 50 or older.
• Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $66,000 for 2023, an increase from $61,000 in 2022.
• The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500. For employees aged 50 or over, a $3,500 catch-up contribution is also allowed.
• The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan will increase to $22,500. It will increase to $30,000 in 2023 for those aged 50 or older.
• Additional information on 2023 changes for retirement plan contributions can be found on the IRS website.
  
  

If you intend to max out 401(k) contributions for 2023, it could be beneficial to make changes early to spread out contributions versus contributing more later in the year. If you opt for contributing to your 401(k) through bonus programs, ensure your employer plan allows for any 401(k) match through that option; some may only cover 401(k) match through regular paycheck deferral. Additionally, the sooner you contribute to your retirement accounts, the more time compound interest can impact your long-term retirement funds.

While the 2023 contribution limit increases provide additional opportunities to save for retirement, every investor's financial situation is different. If you have questions about the best course of action for your situation, please reach out, and we can create a plan to take advantage of these opportunities.