The IRS has released Notice 2022-55, which provides the 2023 dollar limitations on benefits and contributions under qualified retirement plans. These amounts are adjusted annually and based on cost-of-living-adjustments (COLAs) which are adjusted to reflect changes in the Consumer Price Index for Urban Consumers (CPI-U). Seeing as we are in a period of inflation, you will notice most amounts have increased by 7-11%.
401(k) 2023 Benefit Plan Limits
Defined Contribution Plans | 2023 | 2022 | Amount of Change |
|---|---|---|---|
401(k)/403(b)/457(b) Elective Deferrals | $22,500 | $20,500 | Increase of $2,000 |
Catch-Up Contributions (excluding SIMPLE) | $7,500 | $6,500 | Increase of $1,000 |
SIMPLE Plan Employee Deferrals | $15,500 | $14,000 | Increase of $1,500 |
SIMPLE Plan Catch-Up Contributions | $3,500 | $3,000 | Increase of $500 |
Defined Contribution Maximum Limit (Section 415(c)) | $66,000 | $61,000 | Increase of $5,000 |
Defined Contribution Max Limit + Catch-Up | $73,500 | $67,500 | Increase of $6,000 |
Maximum Annual Benefit of Defined Benefit Plans | $265,000 | $245,000 | Increase of $20,000 |
Individual Retirement Account (IRA) | $6,500 | $6,000 | Increase of $500 |
IRA Catch-Up Contribution | $1,000 | $1,000 | No change |
Compensation Limits
Compensation Limits | 2023 | 2022 | Amount of Change |
|---|---|---|---|
Maximum Plan Compensation | $330,000 | $305,000 | Increase of $25,000 |
Income Subject to Social Security | $160,200 | $147,000 | Increase of $13,200 |
Key Employee Compensation Threshold | $215,00 | $200,000 | Increase of $15,000 |
Highly Compensated EE Threshold | $150,000 | $135,000 | Increase of $15,000 |
Prepare for Retirement with Wealth Management
For your convenience, we created a 1-page guide with this information, which you can view and save by clicking here. If you have questions about the best way to invest in the varying options available to you, reach out to Earl to set up a meeting. Our Wealth Management services are designed to help you better understand what works best for your unique situation. Just email us by clicking the button below.
Earl Blackmon, CPA
Avizo Group offers Wealth Management for clients who would like assistance in investing, saving, and portfolio diversification. This is an area of need for many of our clients who want to invest but need someone they know and trust to help them. Earl Blackmon holds a Series 7 and Series 66 license.
