Last week the IRS announced 2023 cost-of-living adjustments for tax-advantaged retirement savings plans. These updates include the Federal Thrift Savings Plan (TSP).
The contribution limit in 2023 for employees participating in 401(k), 403(b), 457, and TSP plans has been increased to $22,500, up from $20,500 in 2022. The catch-up contribution limit for those aged 50 and older has increased to $7,500, up from $6,500 last year. This means that those who are 50 and older can contribute up to $30,000 to their TSP for 2023.
IRA annual contribution limits also have increased to $6,500, up from $6,000. The IRA catch-up contribution remains the same, at an additional $1,000.
In addition to contribution limits, income ranges to determine eligibility for IRAs have also increased for 2023:
- For single taxpayers covered by a retirement plan at work, the phase-out range has increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range has increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range has increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
- The income phase-out range for taxpayers making contributions to a Roth IRA increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000. For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
While these increases have been widely anticipated, you may still have questions about this and other economic factors. Our team of Fiduciary Financial Advisors is happy to discuss how this might affect your financial strategy and help you navigate the opportunities available to you!
Please let us know if you would like to discuss your concerns about current economic conditions, your federal benefits, or your future/retirement goals. We are always ready to help you navigate through tumultuous times. We offer a no-cost initial consultation.
All the best,
The PlanVest Federal Team