Near-record levels.
The Internal Revenue Service has released new limits for the coming year. After months of high inflation and financial uncertainty, some of these cost-of-living-based adjustments have reached near-record levels.
Individual Retirement Accounts (IRAs). IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500.
Roth IRAs. The income phase-out range for Roth IRA contributions increases to $138,000-$153,000 for single filers and heads of household, a $9,000 increase. For married couples filing jointly, phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.
Workplace Retirement Accounts. Those with 401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, the limit rising to $22,500. Those aged 50 and older will now have the ability to contribute an extra $7,500, bringing their total limit to $30,000.
SIMPLE Accounts. A $1,500 increase in limits for 2023 gives individuals contributing to this incentive match plan a $15,500 stop light.
Other Changes. In addition to changes in contributions limits, the IRS also announced several other changes for 2023, including an increase to the annual exclusion for gifts to $17,000 per person and an increase to the estate tax exclusion threshold.
SECURE 2.0 Act. In the last week of 2022, President Joe Biden signed the $1.7 trillion omnibus spending package which contains the SECURE 2.0 Act—a package of retirement reform that will have widespread implications for the industry and will increase the savings potential for many Americans.
Some of the SECURE 2.0 provisions will take effect on January 1, 2023, such as increasing the required minimum distribution age to 73. Others will take effect in the future, such as requiring automatic enrollment for new 401(k) and 403(b) plans, starting in 2025.
We encourage you to contact your advisor here at Kendall Capital, and we can guide you through the upcoming changes.
