Article published by Forbes.com
Written by Janet Novack
“The Internal Revenue Service announced today that young workers will be allowed to contribute up to $22,500 pretax to a 401(k) or similar retirement savings plan in 2023, a $2,000 jump from the current $20,500 limit. Those 50 or older will be permitted to sock away up to $30,000, a $3,000 boost, which includes a $7,500 “catch-up” contribution, up from a $6,500 catch-up in 2022. That means employees who are already contributing the maximum and are able to save more will in effect be able to give themselves a tax cut.”
“At the same time, the IRS said, the limit for contributions to a pre-tax or Roth IRA will rise next year to $6,500, up from the $6,000 level where it has been stalled for four years. Those 50 and older can make an additional $1,000 catch-up contribution to an IRA—a number that is not subject to inflation adjustments.
“Meanwhile, the maximum contribution an employee can make to a Simple IRA Plan—a retirement plan designed for small businesses—will rise to $15,500 in 2023, up from $14,000.
“The contribution limit increases were widely anticipated since they are based on the inflation rate—now running at a 40-year high. According to benefits consultant Mercer, the limit increases are all the largest ever. (The last time inflation was this high, automatic adjustments weren’t a part of the tax code.)
“Last week, the IRS released a slew of other inflation adjustments, including higher standard deductions and tax brackets and increases in the amount of wealth that can be transferred free of gift or estate tax. The Social Security Administration also announced an 8.7% cost of living adjustment for 2023—an automatic benefits boost increase for 70 million Americans.
“The full set of IRS adjustments to retirement plans are available here, in Notice 2022-55.
“Here’s more of what you need to know about the retirement adjustments for 2023.”
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Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. Megan is also a fully licensed Life, Health, and Annuity agent. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.
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