New year. New 2023 contribution limits. Let’s start saving!
Today we are going to talk about the changes to the retirement account contribution limits in 2023. I know in 2022 we had a lot of things going on: from high inflation to down markets. I hope this video gives you a little good news, because you are able to save even more in 2023! If you are looking for a deeper article exploring this topic, check out this one! Now, we are going to look at the main retirement savings vehicles most people have through their employers.
401(k), 403(b), 457s
In 2022 the max you were allowed to contribute was $20,500. Iif you are over 50, you got an additional $6,500. In 2023, that number increases all the way up to $22,500. That’s a change of $2,000 between 2023 and 2022. That’s a $2,000 increase for your 401(k), 403(b), and 457s.
IRA and Roth IRAs
So we know, those of you who have been saving, that the limit has been $6,000 for the last several years for individual retirement accounts. If you are 50 years or older, you got an additional $1,000. Well, finally the IRS has said “hey! Now you are able to save more into those plans in 2023.” How much more?
The number is now $6,500 with an additional catch up of $1,000. That part remains the same, but every little bit counts especially in those Roth accounts. We are able to use that money tax free in the future. So what’s the increase here? If my math is right, that’s an additional $500 for these individual retirement accounts.
That is a Health Savings Account. I realize that this is not a retirement account, but what it is, if you have a high deductible health plan, you are eligible for an HSA. Check out this helpful article to dive deeper into HSA! Right now, we are going to talk about the helpful little boost we are given in 2023. This could be a great vehicle if you aren’t paying for medical expenses currently. You could actually invest those funds and save them for retirement.
We have two limits that are changing slightly, first being for those who are single, second for those who have a family. For 2022, last year, you were able to contribute $3,650 as a single person and families were able to contribute $7,300. Now, for 2023, you are going to get an increase of $200, that’s now $3,850 for single individuals. For families that’s going all the way up to $7,750. So there you are getting a nice increase of $450.
Planning for 2023 Contribution Limits
These are all things to keep in mind as you plan from 2023. Think about what you want to be saving for your retirement and health expenses as you move down the road. If you aren’t quite sure what you should be saving or want to see if you are on track, please reach out! We would love to see how we can help.
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What tax bracket are you in? If you have a high income, tax brackets explained before you can begin to work on tax savings strategies.
We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.