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Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#161 - New Year Brings New Contribution Limits


New Year Brings New Contribution Limits

The new year came with a change to many of the retirement contribution limits. Below are a few of the more popular ones:

  • 401(k) increased $2,000 to $22,500

  • 401(k) catch up increased $1,000 to $7,500

  • IRA/Roth increased $500 to $6,500

  • IRA/Roth catch up stayed at $1,000

  • HSA Individual increased $200 to $3,850

  • HSA Family increased $450 to $7,750

  • HSA catch up stayed at $1,000

Given that some retirement plan contributions can be made after year-end for the prior tax year, make sure you know what limit applies prior to making the contribution. For example, even though we are within calendar year 2023 if you are making a Roth IRA contribution for 2022 the max limit is $6,000, not $6,500. Many with monthly contributions may need to make a small adjustment or else you won’t quite max out. For example, while in 2022 a $500 monthly contribution would max out an IRA ($500*12=$6,000). We now have the nice round number of $541.66666666... repeating ($541.66*12=$6,499.92). The turning of the year in many cases also brings changes in account limits. Make sure you know the correct limit for what year you are trying to max out prior to making a contribution. Also, there could be other factors that change the amount you are able to contribute (i.e. income, age, etc.).

 

  • The Biden administration has released details regarding an amendment to the current REPAYE plan. These changes are still in the comment period and not official yet. This article attempts to quantify the impact (there are other posts on the site that explain it). Per the article, “But what’s clear is the proposed New REPAYE plan is the biggest policy benefit given to student loan borrowers ever, even when including student loan cancellation.” As always with student loans exercise caution and be certain you know all the ramifications before making any changes, especially if pursuing forgiveness.

 

Thank you for reading!


Images from Pexels: photographer Jess Bailey Designs

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