401K contribution limit in 2023 is now $22,500. In 2023, the 401k contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $22,500. This total is up from $20,500 in 2022. If you have access to any of these plans, take advantage and boost your retirement savings.
Catch Up 401k Contribution Limit
The Internal Revenue Service (IRS) has also announced that the catch-up 401k contribution limit from employees will also be increased in 2023. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $7,500. This total is up from $6,500 in 2022.
Taken together, starting in 2023, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000. The IRS has also noted that the catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans will also be increased in 2023. For these individuals, the contribution amount will be increased to $3,500 in 2023. This total is up from $3,000.
401k Match
This change does not appear to affect the match for employers. As you may already know, an employer 401K match means that your employer contributes a certain amount. Typically, the 401k match is a percentage of your annual salary to your retirement plan. This is in effect, free money. For most employees, if you contribute to your 401K, your employer does also. Take advantage of the added limits to further boost your retirement savings on your journey to financial independence.
Conclusion
Tax advantage accounts are one of the feet making up your three legged retirement stool. These three legs include your savings, employer relate accounts such as a pension, and a retirement account. In 2023, the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $22,500. This total is up from $20,500 in 2022. If you have access to any of these plans, take advantage and boost your retirement savings.
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