401(k) and IRA Contributions Limit increase

To account for inflation and an increased cost of living, there are increases in 401(k) and IRA retirement.

plan contribution limits in 2023.

• If you contribute to a 401(k) or 403(b) you can now put up to $22,500 a year and can contribute an extra $7,500 if you are 60 or older.

• If you have a traditional or Roth IRA, you can contribute up to $6,500 and if you are over 60, an additional $1,000.

Tax Deductible IRA Contributions

For active participants in employer retirement plans, phase out for making individual retirement account (IRA) contributions will occur at AGI between $73,000 and $83,000 for single or head of household filers, $16,000 and $136,000 to joint filers.

For those with IRA’s who do not actively participate in another plan, but their spouse does, phaseout will now range from $218,000 to $228,000 for those married and filing joint returns. For a married individual filing separately, the phase=out range is not subject to an annual cost-of-living and remains at $0 to $10,000.

These are income limits on tax-deductible contributions, however, there is no overall limit for contributing to a traditional IRA. Phaseouts do not apply if neither the taxpayer nor the spouse has a workplace retirement plan.

Roth IRA income limits

Single or head of household: If you make less than $153,0000 (phase out between $129,00 and $153,000)

Married filing jointly: If you make less than $218,000 (phase out between $218,00 and $228,000)

Married filing separately: If living with the spouse, you will not be able to contribute, if separately, same limits of single or head of household.

This gives you the ability to rollover the contribution to a ROTH IRA and avoid the contribution limits that a ROTH account has. Consider a Roth Rollover.

Please contact my office for more information.