It’s that time of year once again when the U.S. Internal Revenue Service has announced its 2023 limitations on retirement plans for the 2023 tax year.
For 2023, the 401(k) retirement maximum contribution limit has been raised from $20,500 to $22,500 for elective deferrals, with a maximum contribution increasing from $61,000 to $66,000 for all sources (employee and employer). Human resources and payroll should update their systems and employee communications, as appropriate, reflecting changes effective January 1, 2023.
*If age 50+ by year-end
The IRS has also announced the Individual Retirement Account (IRA) limits effective January 1, 2023. The IRA retirement annual contribution limit for 2023 increases from $6,000 to $6,500. If you are over 50, the annual catch-up contribution not subject to annual cost-of-living adjustment is $1,000.
Additional information and technical guidance may be found in the IRS source documents below:
IRS: Defined Benefit Plan Benefit Limits
Visit ERI for additional information on retirement contribution limits and to stay updated on new and emerging trends in the compensation world.
