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IRS increases retirement savings amount in 2023, boosting 401k power

FILE - This April 13, 2014, file photo shows the Internal Revenue Service (IRS) headquarters building in Washington. 2019 was another tough year for the IRS, according to a new federal report. Burdened with years of budget cuts and a recent increase in workload to implement a new tax law, the IRS struggled to deliver on its mission in the past fiscal year. The annual report from the Office of Taxpayer Advocate found that in the 2019 fiscal year, among other problems, the agency failed to collect billions in unpaid taxes. (AP Photo/J. David Ake, File)
by: WRTV Staff
Posted: / Updated:

In an unprecedented move, the Internal Revenue Service (IRS) boosted contribution limits for tax-deferred, and tax-advantaged retirement savings accounts like the 401K for 2023.

Beginning next year, taxpayers will be able to contribute up to $22,500 into a 401K account. That will also include other accounts like the 403(b) and most 457 plans or the Thrift Savings Plan, which is used by federal employees.

That’s a $2,000, or 9.8%, boost from the current $20,500 federal contribution limit.

The IRS made the move, largely, due to inflation.

IRAs and after-tax Roth IRAs will have an increase, also, from $6,000 currently to $6,500, starting next year. That’s an 8.3% boost.

As CNN reported, more changes are expected as lawmakers continue to work to pass legislation that relates to retirement savings and ways to combat inflation.

Read the full statement from the IRS on all of the changes that are coming, on their website.

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