IRS to make largest ever increase to 401(k) contribution limit
Millions of Americans can save more in retirement accounts next year, after inflation adjustments made by the Internal Revenue Service. According to benefits provider Milliman, employee contribution limit for 401(k) and similar workplace plans will jump $2,000 to $22,500 for 2023, the largest increase ever in terms of dollars and percentage. Meanwhile, the amount taxpayers can contribute to an individual retirement account will be $6,500 for 2023, up from $6,000. The retirement news follows last week's announcement of adjustments to income tax brackets and dozens of other adjustments including the estate and gift tax exclusion, made annually under formulas set by Congress. “You may not feel the pinch now, and you’ll reap the rewards later in retirement,” says Maria Bruno, head of U.S. Wealth Planning Research at Vanguard, which administers retirement plans for nearly five million participants. In Vanguard’s retirement savings plans during 2021, 14% of participants saved the maximum amount of $19,500 ($26,000 for those age 50 or older). Six in 10 participants with income of more than $150,000 made catch-up contributions.
Wall Street Journal