While inflation hurts our pocketbooks day in and day out, there is one silver lining if you know where to look.
The IRS recently published cost-of-living adjustments for retirement plan contribution limits for 2023, and the overall IRS 415 limits increased by $6000. An extra $6000 invested every year for 20 years can grow to around $250,000 assuming about a 7% rate of return. While the taxability of this money will vary based on the type of account you contribute to, the size of this extra potential nest egg cannot be ignored.
The new contributions limits for 2023 are below.
- 401(k)/403(b): $22,500. Additional $7,500 catch-up for age 50+.
- 401(k) Overall 415 Limit: $66,000. Additional $7,500 catch-up for age 50+.
- This limit is accessible if your company offers an After-tax account. Note that this number includes both employee and employer contributions.
- Health Savings Account: $3,850 (self-only) or $7,750 (family). Additional $1000 catch up for age 55+.
- Simple IRA: $15,500. Additional $3500 catch-up for age 50+.
- Roth & Traditional IRA: $6,500. Additional $1,000 catch-up for age 50+.
Note that there are limitations around who is eligible to make 401(k), HSA, and IRA contributions. Please reach out with any questions regarding how to best utilize the accounts at your disposal.
Ready to start planning for a brighter future? Call today at (408) 840-4030, or contact our team online.