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The IRS has released its 2023 cost-of-living-adjusted limitation amounts for tax-qualified retirement plans and IRAs. Read on for a summary of the most important updates.
Tax-qualified retirement plans
- Defined benefit plan annual accrual limit – increased from $245,000 to $265,000.
- Defined contribution plan annual addition limit – increased from $61,000 to $66,000.
- Elective deferrals annual limit – increased from $20,500 to $22,500.
- Annual compensation limit – increased from $305,000 to $330,000.
- Compensation threshold for top-heavy plan “key employee” status – increased from $200,000 to $215,000.
- Compensation threshold for “highly compensated employee” status – increased from $135,000 to $150,000.
- Dollar limit for catch-up contributions for individuals aged 50 or over – increased from $6,500 to $7,500.
- Contribution limit for SIMPLE retirement accounts – increased from $14,000 to $15,500.
- Annual Section 457(b) plan limit – increased from $20,500 to $22,500.
Traditional IRAs
- Annual maximum deductible amount for traditional IRA contributions – increased from $6,000 to $6,500.
- Dollar amount for determining deductible amount of traditional IRA contributions
- For active participants in an employer retirement plan filing a joint return or as a qualifying widow(er) – increased from $109,000 to $116,000.
- For all others who are active participants in an employer retirement plan (other than married taxpayers filing separate returns) – increased from $68,000 to $73,000.
- If not an active participant in an employer retirement plan but spouse is – increased from $204,000 to $218,000.
- Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions
- For single individuals and heads of household who are active participants in an employer retirement plan – increased from $68,000-$78,000 to $73,000-$83,000.
- For married couples filing jointly where the spouse who makes the traditional IRA contribution is an active participant in an employer retirement plan – increased from $109,000-$129,000 to $116,000-$136,000.
- For traditional IRA contributions by an individual who is not an active participant in an employer retirement plan but whose spouse is – increased from $204,000-$214,000 to $218,000-$228,000.
Roth IRAs
- Adjusted gross income limit for determining maximum Roth IRA contributions
- If married and filing jointly or if filing as a qualifying widow(er) – increased from $204,000 to $218,000.
- For all others (other than married taxpayers filing separate returns) – increased from $129,000 to $138,000.
- Adjusted gross income phase-out range for contributions to a Roth IRA
- For married couples filing jointly – increased from $204,000-$214,000 to $218,000-$228,000.
- For singles and heads of household – increased from $129,000-$144,000 to $138,000-$153,000.
Subject matter expertise
Dana Fried
JD, LLM, Managing Director - National Tax Services
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