What does your retirement saving plan look like for the new year? Thanks to the IRS’s news on cost-of-living adjustments, it could mean increased funding for your future. The IRS recently shared its 2023 cost-of-living adjustments (COLAs) for employer-sponsored retirement accounts and the new changes allow for increased opportunities for tax benefits and overall savings for your retirement.
Here’s how the 2023 COLAs may impact your retirement savings:
The maximum retirement plan contribution limit for 2023 is $22,500
For contributions to 401(k) or 403(b) retirement plans, you can now contribute $22,500 to your account, an increase from $20,500 last year. This includes pre-tax and Roth contributions, depending on what your plan allows. The limit remains the same even with a potential job change or if you have other retirement accounts you contribute to throughout the year.
The catch-up contribution limit for 2023 is $7,500
This is an increase of $1,000 as compared to 2022. With this increase, you have the chance to save a total of $30,000 if you are 50 years or older in 2023. If you plan to turn 50 in 2023, you can begin making extra contributions as soon as January if your plan allows for it.
Income limits for Saver’s Credit increase for 2023
Individuals earning as much as $36,500 or married couples earning up to $73,000 who contribute to retirement accounts may be eligible for the Saver’s Credit. If you qualify, the Saver’s Credit may reduce what you owe in taxes. If you have questions or are seeking additional information regarding this credit, we recommend asking your tax preparer. Don’t have one? BerganKDV can assist with this, we offer tax preparation services to clients and would be happy to help you.
The 2023 COLAs present a great opportunity to start the new year off with increased retirement and tax savings. Be sure to review your retirement plan to determine if increasing your contribution limits makes sense for you and your financial goals.
At BerganKDV, we partner with employers to ensure they have the resources and tools needed to educate their team members on maximizing their retirement plans, such as taking advantage of the 2023 COLAs.
With our experienced Retirement Plan Solutions team, we help organizations develop retirement plan offerings that optimize savings opportunities and keep team members engaged. If you are curious to learn more about how our services can set your teams up for success in their financial futures, contact us today and we would be happy to discuss it further! Let’s talk!