In 2023, the IRA contribution limit will increase to $6,500. This limit is up from $6,000 in 2022. On the other hand, there will be no change to the catch-up contribution limit. The IRA catch‑up contribution limit for individuals aged 50 and over will remain $1,000. If you are in the position to contribute to your IRA, take advantage and boost your retirement savings.
IRA Contribution Limits For deductions
The IRS has announced that the IRA contribution limit will increase to $6,500 in 2023. The income ranges for determining eligibility to make deductible contributions to traditional and roth IRAs will also increase in 2023. Generally, taxpayers can deduct contributions to a traditional IRA if they meet certain conditions.
If covered by a retirement plan at work, the deduction may be reduced or phased out depending on filing status and income. If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs do not apply.
Phase‑out Ranges For 2023
Single taxpayers covered by a workplace retirement plan will have the phase out increase in 2023. The phase-out range in 2023 will be between $73,000 and $83,000, up from between $68,000 and $78,000.
Married couples filing jointly will also have an increase. If the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000.
For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $73,000 for married couples filing jointly, up from $68,000; $54,750 for heads of household, up from $51,000; and $36,500 for singles and married individuals filing separately, up from $34,000.
The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000.
Take Advantage
If you are able to increase your IRA contributions, do so. IRAs are one of the most effective ways to save and invest for the future. IRAs allows your money to grow on a tax-deferred (Traditional) or tax-free basis (Roth), depending on the type of account. If it is a Roth IRA or a Traditional IRA, move forward toward your financial goals.
Conclusion
Tax advantage accounts are one of the feet making up your three legged retirement stool. These three legs include your savings and retirement account, employer relate account such as a pension, and social security. In 2023, the limit on annual contributions to an IRA will be increased to $6,500. This total is up from $6,000 in 2022. On the other hand, there will be no change to the catch-up contribution limit. The IRA catch‑up contribution limit for individuals aged 50 and over will remain $1,000. If you are able to contribute to an IRA, take advantage and boost your retirement savings. Continue your journey to financial independence.
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