Ahead of its November 1st deadline, the Internal Revenue Service (“IRS”) has announced the following 2023 annual limits for qualified retirement plan contributions, the highest increases ever issued by the Agency in a single year:
- For 401(k), 403(b), and 457(b) plans, the amount an individual can contribute through elective deferrals has been increased to $22,500 (up from $20,500), and catch-up contributions for individuals aged 50 or older increased to $7,500 (up from $6,500). Thus, individuals aged 50 and older can contribute up to $30,000 annually to their 401(k), 403(b), or 457(b) retirement plan.
- For defined contribution plans, the total dollar limit on contributions (includes employee and employer deferrals) increased to $66,000 (up from $61,000) and up to $73,000 with catch-up contributions for those aged 50 or over.
- The maximum amount of annual compensation that may be taken into account for a participant under a qualified plan increased to $330,000 (up from $305,000).
- The “Highly Compensated Employee” dollar amount identifier increased to $150,000 (up from $135,000).
- For defined benefit plans (pensions and cash balance plans), the maximum annual benefit increased to $265,000 (up from $245,000).
The record increases are designed to help millions of retirement plan participants across the country save more for retirement starting next year. The full IRS Notice for the 2023 contribution limitation adjustments can be viewed here.
If you have questions about your company’s retirement, deferred compensation, health care, or other employee benefits plan, give our Fraser Stryker Employee Benefits Team a call at 402-341-6000.
This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.