IRS Raises 401(k) Contribution Limits

Employees can put more into their retirement accounts next year following an announcement from the IRS Oct. 21. 

IRS officials said contribution limits for 401(k), 403(b) and most 457 plans will increase to $22,500 in 2023. It is up from $20,500, and becomes the largest dollar and percentage increase ever. 

The changes are part of the federal government cost-of-living adjustments amid high inflation rates. 

Taxpayers will be able to contribute $6,500 to an individual retirement account, up from $6,000. 

For people aged 50 and over, the catch-up contribution increased by $1,000 to $7,500.

For 2023, those employees will be able to contribute up to $30,000 to their plan beginning in 2023.

According to the latest National Compensation Survey, officials with the U.S. Bureau of Labor Statistics estimates 52% of private industry workers participate in their employer defined benefit plan and defined contribution retirement plan.

For more information, contact CBIA’s Phillip Montgomery (860.244.1982).