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By the Numbers: 2023 Retirement Plan Contribution Limits


If you’re working on your retirement savings strategy for 2023 you need to know exactly how much you can sock away. The Internal Revenue Service routinely adjusts the annual contribution limits for different types of retirement plans, including 401(k)s and IRAs. For 2023 there are a few key changes that take effect. Here’s a rundown of what you can expect if you’re looking to max out your retirement plan this year. Consider working with a financial advisor as you create or update a retirement plan.

Defined Contribution Plans

A defined contribution plan is any plan that allows you to chip in money towards your own retirement. Your employer can also make contributions but they’re not required to. Defined contribution plans include 401(k)s, 403(b) accounts, 457 accounts and the federal Thrift Savings Plan.

For 2023, the limit on contributions for these types of plans is $22,500 in 2023, $30,000 for those 50 and older.

Find out now: How much do I need to save for retirement?

Defined Benefit Plans

Defined benefit plans may allow employee contributions but they’re typically funded solely by the employer. This type of retirement plan is designed to pay you a specific amount of money once you retire. Your total benefit amount is calculated based on what your employer has put in, your salary at retirement and your years of service.

For 2023, the total annual benefit you’re entitled to is the lesser of 100% of your average compensation for your three highest consecutive calendar years or $265,000.

Related Article: 5 Ways You Could Be Sabotaging Your Retirement

Individual Retirement Accounts

The contribution limits for traditional and Roth IRAs are $6,500 for 2023 and a $1,000 catch-up contribution limit for people who are 50 or over. While these limits are unchanged, the IRS did make some adjustments to the income phase-out limits for Roth IRA contributions.

For tax year 2023, single filers and heads of household with a MAGI from at least $138,000 up to $153,000 can only contribute a reduced amount. If you file single and make equal to or more than $153,000, you cannot contribute to a Roth IRA at all.

For tax year 2023, married couples filing jointly have an income phase-out range of $218,000 up to $228,000. No contributions are allowed if the couple’s MAGI is equal to or more than $228,000. If you’re married, but filing separately, your phase-out range is the same as that of single filers, though it only applies if you and your spouse don’t live together.


By the Numbers: 2023 Retirement Plan Contribution Limits

If you work for a smaller company or you’re self-employed, you may be able to contribute to a SIMPLE or SEP IRA. Small business owners can use a SIMPLE IRA to contribute money towards retirement for themselves or their employees. Employees can also contribute to the plan through salary deferrals. An SEP IRA or simplified employee pension allows employers to contribute directly to an IRA on behalf of their employees. You can also set up this type of retirement account if you’re self-employed.

Retirement plans offered through your employer can either be defined benefit plans, such as a pension, or defined contribution plans, like a 403(b), 457 or 401(k) plan. If you’re enrolled in any of the above, you can defer up to $22,500 of your salary into your account for 2023. The maximum 401(k) contribution limit also applies to federal employees who participate in the Thrift Savings Plan. This cap doesn’t include employer matching contributions.

Although your company match is not included in maximum 401(k) contribution limits, the IRS does cap the total sum of your contributions and your employer’s contributions. For 2023, the cap is the lesser of either 100% of employee compensation or $66,000. Note that these caps don’t include catch-up contributions, which can be up to $7,500 for those 50 or older.

Retirement Saver’s Credit

Two of the most common options available are SEP and SIMPLE IRAs. Which one you choose depends on your business structure and whether you have any employees, but generally, both plans offer more benefits than you’d get with a traditional IRA. For 2023, you can contribute a maximum of $66,000 in a SEP IRA or $15,500 for a SIMPLE IRA in 2023.

If you own a sole proprietorship or your only employee is your spouse, a solo 401(k) may also be a good choice. The 2022 contribution limits are the same as a SEP IRA and your contributions grow on a tax-deferred basis.

Bottom Line

By the Numbers: 2023 Retirement Plan Contribution Limits

The government adjusts the annual contribution limits you may take for different types of retirement plans, including 401(k)s, SEPs and IRAs. If you’re aiming to maximize your retirement savings be sure you know what the 2022 contribution limits have been adjusted to.

Tips on Retirement

  • When it comes to your retirement you can’t afford to miss out on an opportunity to save. That’s where the insight and guidance of a financial advisor can be so valuable. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Our free retirement calculator will help you determine how much you need to save for retirement.

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