IRS has raised the limits for 2023 retirement contributions. Due to inflation, the 2023 contribution limits have increased to much higher amounts that haven’t been seen in the previous years. The high contribution limits present great opportunities for retirement savings.
Individuals above the age of 50 can contribute up to $30,000 to their 401k plan, including $7,500 catch-up contribution value in 2023. For IRAs, the amount an individual can contribute increases to $6,500 from $6,000 in 2022. The catch-up contribution amount remains $1,000. If you are self-employed, you can make 25% of your net earnings from self-employment up to $66,000 in 2023.
In addition, IRS has released new income ranges. The increases in income thresholds make it even more attractive for small business owners to consider advanced retirement plans, such as Profit Sharing Plan, Cash balance or Defined Benefit Plan, to maximize retirement contributions while reducing income taxes for business and personal. Talk to your financial advisor on how you can benefit from those high contribution limits in 2023.