401K Contribution Limits 2023: Up to $66,000 Increase Compared Last Year

The Internal Revenue Service establishes a maximum amount of contribution limits every year. In this article, read and find out by how much the 401K Contribution Limits 2023 have increased!

One of the bonuses that most employers need to offer their newly hired workers is the 401(k) retirement plan. The amount of 401(k) a worker receives when they retire depends on the employer. However, the Internal Revenue Service (IRS) has established a maximum amount that an employer can contribute every year.

An article on MARCA states that in 2022, the maximum amount that can be contributed to a Roth 401(k) and the pretax contributions that can be added to a traditional 401(k) was worth $20,500. In addition, individuals who are 50 or older were able to contribute an additional of $6,500 only. No one can contribute an unlimited amount of 401K Contribution Limits 2023 because the IRS made rules that must be followed.

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Changes in 401K Contribution Limits 2023

According to Hagen, back in 2022, individuals who contribute to the 401(k) program have a limit for employee contributions of up to $20,500 only. However, this year, the 401K Contribution Limits 2023 has increased by $2,000 which makes the limit up to $22,500. The limit to combined employer and employee contributions have also increased up to $66,000.

Furthermore, individuals who are 50 or older will be eligible for an increase in employee contribution limit of up to $30,000. They will also be eligible for an additional $7,500 in catch-up contributions. Based on an individual’s plan, they may also be eligible to contribute post-taxes that are beyond the pretax and Roth limit.

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