Nov 7, 2022
In today’s episode of the “Inside the Plan with the 401(k)
Brothers”, host Bill Bush and Andy Bush, advisors at Horizon
Financial Group take a look at changes in company retirement plan
contribution limits for the coming year 2023 and will compare them
with year 2022.
- 00:51: It is that time of year, that not only is fall or
autumn, but it's the time of year that the IRS looks at
contribution limits for the upcoming year and announces changes, if
- 01:48: Deferral limit for 2023 is going to be $22,500, an
increase of $2000. If you are a participant in a 401K plan or 403B
plan, your annual elective deferral limit for 2022 was
- 03:44: As per Andy you don't have to wait until you hit 50 in
2023. Anytime you could become 50 and you can put the extra $7500
in all the way through and plan for it throughout the year.
- 04:52: There is a legislation being discussed right now that,
authorities will likely even boost the catch-up contribution
amounts even further, says Bill.
- 05:19: There is an overall plan limit of the dollars that can
go in per individual per and in 2022 it was 61,000 for any
individual. If you had the catch up, you could have done
- 07:08: When you think about on the employer side of things in
SIMPLE IRA, a non- elective employer deferral is 2% no matter what
the employee is contributing, or doing or there's a match and it
can be up to 3%.
- 08:10: They have changed the definition of highly compensated
employee just a little bit based on the dollar amount and that HCE
is always looking at the prior year. For HCE it was 135,000 in 2022
and that's moved up to 150,000 in 2023.
- 09:34: As per Andy, the traditional and Roth IRA's have
contribution limits. In 2022, those are $6000 but next year they
move up to 6500 but the catch-up provision stays the same at
- 10:20: There are ranges that are involved in traditional IRA
contributions to be deductible depending on how you file your taxes
and how much you make.
- 12:38: The income phases out range for taxpayers making
contributions to a Roth IRA has been increased and it's going
between $138,000 to $153,000 for singles, says Bill.
- 13:24: If you are married filing jointly and your modified
adjusted income is above the $228,000 you cannot contribute to a
Roth IRA in 2023.
- 16:08: When you cross over the 50-year mark, you really start
to realize that I'm closer to retirement and I need to get my
affairs in order because life is happening so quickly and the
opportunities are becoming fewer and fewer, says Andy
- 16:43: All plans,allow you to change your contribution rates at
the first of the year. But a lot of plans have other different
points where they'll allow you to make changes.
- 17:44 Be intentional about saving rates because saving rates
matter. You have the opportunity coming and opportunity is
increasing for 2023.
Three Key Points
- If you are in SIMPLE IRA plan, your elective deferral which you
are allowed to make in your plan in 2022 is $14,000, but because of
the step up in most everything else ,and the adjustments for
inflation for 2023 the elective deferral limit has moved up to
- If the spouse making the IRA contribution and is covered by a
workplace retirement, that phase is now increased from $116,000 to
$136,000 because after $136k, it’s not deductible.
- It doesn't matter what your income level is to make a
contribution to a Traditional IRA but it does matter what your
income level is if you have a workplace retirement plan to get tax
deductibility for a Traditional IRA.
- “It's interesting that inflation happens because you would
almost link deferral increases to wage inflation.” – Andy
- “There is definitely more capacity to put away dollars for
retirement if you're in a company plan for 2023.” – Bill
- “You pay your social security tax on earnings up to 147,000 in
2022, but next year in 2023 you will pay social security tax on up
to $160,200.” - Bill
- “There are also ways you can save for retirement outside of
employer sponsored plans and that is IRA's and Roth IRA.” –
- “If you're single filing single and you make more than $153k on
your modified adjusted gross income, then you're not allowed to
contribute to a Roth IRA.” - Bill