Another year has almost come and gone, and the temperature isn’t the only thing changing as the year comes to a close. The IRS recently announced that contribution limits for various IRAs and retirement accounts will be increasing this year, and we have all the updates! Many investors have already started planning for 2023, and you can join them with these helpful updates.
With the announcement of the 2023 contribution limits, it’s important to note you still have time to contribute for 2022. Every contribution counts, and each year that you miss out on making your yearly contribution is another year of missed compounding growth! Check out the 2022 Contribution limits or keep reading to find out what’s new for 2023!
Traditional and Roth IRAs
The contribution limits for these two personal plans increased $500 from $6,000 in 2022 to $6,500 in 2023. Additionally, the age 50 catch-up limit remains, as it is always fixed by law at $1,000. The income ranges that determine one’s eligibility to make deductible contributions to Traditional IRAs or contribute to a Roth IRA have also increased.
Employer plans, like SEP IRAs and SIMPLE IRAs, saw a change as well. For SEP IRAs, contribution limits will increase to $66,000 per year for 2023, up $5,000 from 2022 which was $61,000. The amount one is allowed to contribute to a SIMPLE IRA increased to $15,500, up from $14,000. If you are age 50 or over, the catch-up contribution limit also increased, making it possible to contribute an additional $3,500 for 2023, up from $3,000 in 2022. For those with a Solo 401(k), the limit for the total contribution is increasing from $61,000 to $66,000 ($67,500 to $73,500 for those 50 and older). Solo 401(k) contributions work a bit differently than other accounts, so if you hold this type of account and still have questions about your allowed contribution, call our office and ask to speak to Solo 401(k) specialist!
Health Savings Accounts
The Health Savings Account, or HSA, contribution limits are expected to increase, too. For single coverage, it will go up to $3,850 for 2023, an increase from the $3,650 limit in 2022. For HSA accounts with family coverage, you can expect to see the limit go up from $7,300 in 2022 to $7,750 in 2023. These were already announced previously. Those who are 55 or older will still be able to contribute an additional $1,000.
Coverdell Education Savings Account
The Coverdell ESA will be one of the self-directed accounts that will remain the same. Just as in 2022, the maximum contribution limit for Coverdell accounts will be $2,000 per child per year in 2023.
Getting ahead and familiarizing yourself with the 2023 contributions limits will help you prepare and budget for the new year, so as you start preparing for the end of the year be sure to keep contribution limits in mind. It’s never too early to start planning! If you ever have questions about how to make a contribution to your Self-Directed IRA at Quest, call us at 855-FUN-IRAs or schedule a free consultation with an IRA Specialist.