Staying up to date with any new considerations for your tax-advantaged plans is pivotal in planning for your retirement. The IRS recently announced new annual contribution limits for the 2023 tax year. Let’s take a look at some key contribution information for the 2023 tax year.
Before we start, don’t forget that it’s not too late to contribute for 2022! Log into the Client Portal and click “Contributions” on the left side of the screen.
Increased Contribution Limits
Traditional and Roth IRA
The contribution limits for Traditional and Roth IRA has increased to $6,500 for 2023, which is more than the $6,000 for 2022. The $1,000 catch-up contribution for account holders aged 50 or older will remain in effect as well.
SEP IRA holders may contribute 25% of their compensation or $66,000 in 2023, whichever is less, whereas the previous 2022 limit was only $61,000. Furthermore, in calculating compensation for the purpose of this limit, up to $330,000 of compensation needs to be considered versus $305,000 in 2022.
Solo 401(k) participants may contribute up to $66,000 in 2023, up from $61,000 in 2022. The catch-up contribution has increased to $7,500 for account holders age 50 or older.
- $22,500 individual contribution
- 25% employer contribution up to $43,500
Health Savings Account (HSA)
HSA holders with single high-deductible health coverage may contribute $3,850 in 2023, an increase from $3,650 in 2021. Those with family coverage may contribute up to $7,300 in 2023. A $1,000 catch-up contribution for HSA holders age 55 or older still apply for each year.
This limit has increased for 2023: contributions cannot exceed $15,500 per year, up from $14,000 from 2022. For individuals ages 50 and over, a $3,500 catch up contribution can be applied.
Modified Adjusted Gross Income (MAGI)
The tax deductibility of Traditional IRA contributions and the ability to contribute to a Roth IRA may be affected by your modified adjusted gross income (MAGI) and by how you file your taxes.
Click here for IRS information about how MAGI may affect Traditional IRA contributions since the limit was increased for 2023. If you are covered by a retirement plan at work, your deductions for contributions to a traditional IRA is reduced depending on your filing status as an individual or married couple as well as how much you earn in a year.
Click here for IRS information about how MAGI may affect Roth IRA contributions since the limit was increased for 2022 as well. Your contribution limit is reduced depending on your filing status as an individual or married couple as well as how much you earn in a year.
Ready to Make a Contribution?
You have until April 18, 2023—the tax filing deadline—to make 2022 contributions. You can even make 2022 and 2023 contributions at the same time! Log in to the Client Portal and click “Contributions” on the left side of the screen to get started.
Questions? We can help!
Please give us a call at 877-742-1270, or send us a message through the Client Portal if you have questions that we can assist you with.