IRS announces record increases in contribution limits for 401(k) and IRA for 2023

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.