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2023 adjustments to 401(k) and defined contribution plans

 

November 07, 2022

2 minute read

Category: Compliance Updates

couple looking at computer

The Internal Revenue Service (IRS) announced 2023 adjustments for 401(k) and similar defined contribution plans.

401(k) plans: 

Employee 401(k) contributions:

2022

2023
$20,500 $22,500

Plan participants aged 50 or older can contribute an additional $7,500 for the 2023 tax year.

Employer plus employee contributions:

2022

2023
$61,000 $66,000

403(b) and 457(b) plans: 

Employee deferrals into 403(b) and 457(b) plans:

2022

2023
$20,500 $22,500

The age 50 catch-up contribution limit for participants in 403(b) and 457(b) plans has increased to $7,500 for the tax year 2023.

Individual Retirement Accounts (IRA):

IRA contributions:

2022

2023
$6,000 $6,500

The age 50 catch-up for IRA contributions remains at $1,000 for tax year 2023.

The income ranges for determining eligibility to make contributions to a traditional IRA or a Roth IRA have changed. 

For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000.

For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.

For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

If you have any questions or need help communicating these changes to employees, please contact us. We'll continue to monitor and communicate regulatory changes to help you succeed in benefits management.

 

This blog is up to date as of November 2022 and has not been updated for changes in the law, administration or current events.

 
  • Tags:
  • Retirement
  • Compliance

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This information is intended to be educational. It is general in nature and should not be considered financial, legal or tax advice. Consult an attorney or a tax professional regarding your specific situation.

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American Fidelity Assurance Company
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https://americanfidelity.com/blog/compliance/2023-retirement-limits/

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