IRS 2023 Roth IRA contribution limits: how much will they increase for single filers and heads of households?
Investment contribution limits for all plans have been raised due to inflationary pressure meaning you can put more savings away for the future.
Changes are coming in 2023 for your future retirement investments. The annual contribution limits always change with inflation but due to the highest inflation in nealy 40 years the limits are jumping by a sizeable amount for both 401(k) and Roth IRAs.
For those saving in a traditional or Roth IRA the 2023 limit on contributions rises to $6,500 next year, a $500 increase. If you are contributing to either plan and you are over 50 years old then this rises by an extra $1,000 to $7,500 in 2023. However, if your taxable income is lower than this then that is your limit.
Changes to IRA tax deduction income limits
Contributions to an IRA may be tax deductible if your modified adjusted gross income (MAGI) is under a certain limit. For single, head of household or qualifying widow(er) this limit is $73,000 then any contributions are tax deductible. Between $73,000 and $83,000 there is a partial deductible and deductions over $83,000 there is no deduction.
What about 401(k) investment plans?
Announced on Friday, the IRS will increase the contribution limit by $2,000 to $22,500 for 2023.
Workers who are saving for retirement with 401(k), 403(b), most 457 plans, and the Thrift Savings Plan can contribute up to $22,500 to those plans in 2023.
The “catch-up” contribution limit for employees age 50 or older who are involved in these plans also increases from $6,500 to $7,500 for 2023 for a total limit of $30,000.