New Year, New Limits

The contribution limit has increased from $20,500 to $22,500 for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.

The catch-up contribution limits, for individuals aged 50 and older, have increased from $6,500 to $7,500 for 401(k), 403(b), most 457 plans and the Thrift Savings Plan. This means that in 2023, individuals 50 and older can contribute up to $30,000 towards their 401(k), 403(b), most 457 plans and the Thrift Savings Plan.

For individuals participating in a SIMPLE IRA, the contribution limit is $15,500 up from $14,000 with a catch-up contribution of $3,500 for employees aged 50 and older.

The limitation that defines a Highly Compensated Employee (HCE) in 2023 is $150,000 up from $135,000. 

A few more key changes to note as we approach 2023 is the annual compensation increase from $305,000 to $330,000, annual defined contribution (DC) limit increase from $61,000 to $66,000 and the annual defined benefit (DB) contribution limit increase from $245,000 to $265,000.

For a visual outline of the 2023 contribution limits, click here.