The IRS announced last week that it has increased the contribution limits for 401(k) and IRA accounts for 2023.
Beginning next year, you will be able to contribute up to $22,500 to your 401(k) for 2023. IRA contribution amounts were also increased to $6,500 for 2023.
These numbers are adjusted for inflation and represent an approximate 9.5% increase from the 2022 contribution limit to a 401(k) ($20,500) and an approximate 8% increase from the 2022 contribution limit for IRAs.
The catch-up contribution amount for 401(k) plans for those aged 50 and older allows for an additional contribution amount of $7,500 in 2023 for this age group (up from $6,500 in 2022). For SIMPLE Plans an increase in the catch-up contribution to $3,500 for 2023 will apply (up from $3,000 in 2022). The IRA catch-up contribution amount remained the same at $1,000.
The overall total limit of contributions to a 401(k) which include your employer contributions was also increased for both those under 50 and older than 50 years of age.