On October 21st, the IRS released a number of additional inflation adjustments for 2023, including to certain limits for qualified retirement plans. Perhaps most notably, the annual limit for pre-tax and Roth contributions by employees to 401(k) plans has jumped from $20,500 to $22,500, and the annual limit for "catch-up" contributions to such plans by employees who are age 50 or older has increased from $6,500 to $7,500. The table below provides an overview of the key adjustments for qualified retirement plans. Earlier last week, the IRS announced the 2023 inflation adjustments for Flexible Spending Accounts and transportation fringe benefits, as discussed here.
|
Qualified Defined Benefit Plans |
|||
|
2022 |
2023 |
Increase from 2022 to 2023 |
|
|
Annual Maximum Benefit |
$245,000 | $265,000 |
$20,000 |
|
Qualified Defined Contribution Plans |
|||
| 2022 | 2023 | Increase from 2022 to 2023 | |
| Aggregate Annual Contribution Limit |
$61,000 |
$66,000 |
$5,000 |
| Annual Pre-Tax/Roth Contribution Limit |
$20,500 |
$22,500 |
$2,000 |
| Catch-Up Contribution Limit for Individuals 50+ |
$6,500 |
$7,500 |
$1,000 |
|
Other Adjustments for Qualified Plans |
|||
| 2022 | 2023 | Increase from 2022 to 2023 | |
| Annual Participant Compensation Limit |
$305,000 |
$330,000 |
$25,000 |
| Highly Compensated Employee Threshold |
$135,000 |
$150,000 |
$15,000 |
|
Key Employee Compensation Threshold for Top Heavy Testing |
$200,000 | $215,000 |
$15,000 |
IRS Announces 2023 Increases to Qualified Retirement Plan Limits
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
