2023 Retirement Plan Contribution Limits

By Chris Duderstadt

December 15, 2022

2023 Retirement Plan Contribution Limits

Key Points – 2023 Retirement Plan Contribution Limits

  • First Increase in IRA and Roth IRA Contributions Limits Since 2019
  • Roth IRA Compensation Limits
  • SEP and SIMPLE Contributions
  • Workplace Retirement Plans – 401(k), 403(b), and 457(b) Plans
  • 4 Minutes to Read

Retirement Plan Contribution Limits Increasing in 2023

A Christmas Gift from the IRS?!?

Sometimes, the best Christmas gifts can come from someone that you least expect. We’re already seeing that that could be the case this year following an exciting announcement from the IRS. No, that’s not a typo. The IRS announced that retirement plan contribution limits will be increasing for 2023.

However, this shouldn’t really catch anyone off guard. Keep in mind that many of the retirement plan contribution limits are tied to inflation. Let’s do a quick review of 2023 retirement plan contribution limits to see what increased and by how much.

IRA and Roth IRA Contributions

First, let’s look at retirement plan contribution limits for Traditional and Roth IRAs. The annual contribution limit for these will be increasing for the first time since 2019, as it went up to $6,500. It should be noted that the $6,500 limit is combined for Roth and traditional IRA contributions. So, you can’t contribute $6,500 to each. Another thing to keep in mind is that if your compensation is less than $6,500, you aren’t permitted to contribute more than your compensation amount.

Catch-up Contributions

With IRAs, catch-up contributions are always something to consider at the end of each year for those who are 50 and older. Bud Kasper and Logan DeGraeve touched on them briefly on America’s Wealth Management Show when they discussed 8 Tips on Saving for Retirement. But catch-up contributions are an exception when it comes to increased retirement plan contribution limits because they don’t correlate to inflation. So, the catch-up contribution limit for 2023 is still $1,000.

Modified Adjusted Gross Income and Roth IRA Compensation Limits

There’s something else to also consider with Roth IRA contribution limits. That’s your modified adjusted gross income. It needs to be lower than a specific amount to make a contribution directly to a Roth IRA. People who are married filing jointly in 2023 are eligible to make a full contribution if their total modified adjusted gross income is lower than $218,000. If it’s between $218,000 and $228,000, you can still make a partial contribution to Roth. If you’re a single filer, that range is between $138,000 and $153,000 for next year.

Backdoor Roth

If your modified adjusted gross income is greater than that $153,000 (single filer)/$228,000 (married filing jointly) limit, you’re still not completely out of luck, though, for making a contribution directly to Roth. An indirect Roth IRA contribution is still a possibility if you go with the backdoor Roth IRA. A backdoor Roth IRA isn’t a specific kind of IRA. It’s a unique strategy that allows you to work around the contribution limits. You do this by opening a new traditional IRA, making non-deductible contributions, and then doing a Roth conversion.

SEP and SIMPLE IRA Contributions

Next in our review of 2023 retirement plan contribution limits, we look at SEP and SIMPLE IRA contributions. SEP stands for Simplified Employee Pension, while SIMPLE stands for Savings Incentive Match Plan for Employees. Let’s start with the SEP contribution limit for 2023. It’s 25% of up to $330,000 of pay but can’t exceed $66,000. It was up to $305,000 in 2022 and couldn’t exceed $61,000. The percentage drops to 20% of adjusted net earnings for people who are self-employed or employees at unincorporated businesses. However, the $66,000 limit is the same for them as well.

The new year will welcome a $1,500 increase for the SIMPLE IRA employee deferral limit. It was $14,000 in 2022 and will go up to $15,500 in 2023. The catch-up contribution here once you turn 50 is $3,500. It was $3,000 in 2022.

2023 Retirement Plan Contribution Limits

401(k)s, 403(b)s, and 457(b)s

We’re going to round out this article on 2023 retirement plan contribution limits by talking about workplace savings plans. Those include 401(k)s, 403(b)s, and 457(b)s. There were $2,000 increases for the 2023 employee deferral limit for all three of those for 2023. It went from $20,500 in 2022 to $22,500 in 2023.

The catch-up provisions for 401(k)s, 403(b)s, and 457(b)s will go up from $6,500 to $7,500 in 2023. This means that if you’re 50 or older in 2023, you are eligible to put away up to $30,000 next year. It’s important to keep in mind that the $30,000 limit is already factoring in the combined Roth and traditional contributions that someone makes to all their plans each year.

One Important Clarification on 2023 Retirement Plan Contribution Limits

For our closing point on 2023 retirement plan contribution limits, we can’t forget that there’s a separate plan limit which determines most contribution amounts that are allowed for any one plan in any given year. That goes for employee and employer contributions. The limit was $61,000 in 2022 ($67,500 if you’re 50 or older and want to do catch-up provisions). That goes up to $66,000 in 2023 ($73,500 following catch-up contributions).

Do You Have Questions About Retirement Plan Contribution Limits for 2023?

We hope this information about retirement plan contribution limits and the increases for 2023 has been helpful. While this is a nice Christmas gift from the IRS, this isn’t a situation where you immediately tear off the wrapping paper and throw it aside. Instead, think about the impact this can have on your financial plan first and carefully open it while meeting with your CFP® Professional and a CPA.

If you don’t have a financial plan, that’s a much bigger present that you need to give to yourself. It’s essential to have a financial plan if you want to have clarity and confidence while planning for your retirement. We’re giving you the chance to get started by using our financial planning tool from the comfort of your own home. Begin building your plan today at no cost or obligation with the same tool our CFP® Professionals use by clicking the “Start Planning” button below.


Our CFP® Professionals also welcome the opportunity to answer your questions about 2023 retirement plan contribution limits—or anything else regarding your financial life. Just click here to schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals. We can meet with you virtually, in person, or by phone depending on what works best for you.

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.