IRS Announces Increase in 2023 Retirement Plan Contributions

Authored by Judy Brown, MBA, CPA, CFP® | Principal, SC&H Financial Advisors, Inc.

Now is a great time to review your 2022 retirement plan contributions and discuss the impacts of the 2023 contribution limit changes with your financial advisor. Leveraging the increased retirement plan contribution limits can help keep you on track for your financial and tax goals.

401(k), 403(b), most 457 plans*, and the Thrift Savings Plan (TSP)

*Special considerations for some 457 plans.

Individual Retirement Accounts (IRA)*

Traditional IRAs are pre-tax contributions, your money grows tax-deferred, and withdrawals are taxed as ordinary income after age 59 ½.

Roth IRAs are after-tax contributions, your money grows tax-free and you can usually make tax and penalty free withdrawals after 59 ½.

*Note that there are income phase-out thresholds for the Traditional and Roth IRA which have also increased. Our advisors and tax professionals can help determine if you are eligible.

Savings Incentive Match Plan for Employees (SIMPLE) IRA

A SIMPLE IRA retirement plan is for self-employee individuals, small business owners, or any business with less than 100 employees and no other retirement plan. Contributions can be made by the employee, but the employer is required to make either matching or nonelective contributions.

Simplified Employee Pension (SEP) Plan

A SEP-IRA retirement plan is for self-employed individuals and small business owners. Contributions are made by the employer only, not the employee.

To review all of the 2023 IRS changes, please visit: https://www.irs.gov/retirement-plans

SECURE Act 2.0

On December 23, 2022, the U.S. House of Representatives passed the long-awaited retirement bill known as Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0. The SECURE Act 2.0 brought a wide range of changes to retirement planning. Although many of the changes will begin in 2024, you can begin planning this year. Please stay tuned for more information about the SECURE Act 2.0.

If you have any questions about the IRS announcement or the SECURE Act 2.0, the team is here to help.


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