Inflation has significantly increased the annual contribution limits to retirement accounts for 2023. Here’s a quick guide:

Traditional or Roth IRA Or a combination of the two

Maximum amount you can contribute for the year

$6,500, Up to age 49

$7,500, Age 50 and older

Note: Your annual contribution cannot exceed your earned income for the year.

Covered by a retirement plan at work?

At any time during the year

Your ability to deduct your contributions to a traditional IRA may be phased out depending on your modified adjusted gross income (MAGI).

If your filing status is Single or head of household and your modified AGI is $73,000 or less, then you can Deduct 100% of your contribution.

If your filing status is Single or head of household and your modified AGI is more than $73,000 but less than $83,000, then you can take a partial deduction.

If your filing status is Single or head of household and your modified AGI is $83,000 or more, then you can claim no deduction.

If your filing status is Married filing jointly or qualifying widow(er) And your modified AGI is $116,000 or less, then you can deduct $100% of your contribution.

If your filing status is Married filing jointly or qualifying widow(er) And your modified AGI is more than $116,000 but less than $136,000, then you can take a partial deduction.

If your filing status is Married filing jointly or qualifying widow(er) And your modified AGI is $136,000 or more, then you can claim no deduction.

If your filing status is Married filing Separately And your modified AGI is less than $10,000, then you can take a partial deduction.

If your filing status is Married filing Separately And your modified AGI is $10,000 or more, then you can claim no deduction.

If you didn't live with your spouse at any time during the year, your deduction is determined by the "single" filing status.

Note: If you’re not covered by a workplace retirement plan but are married to someone who is, your ability to deduct your traditional IRA contributions gradually phases out once MAGI reaches $218,000 to $228,000 on a joint return.

And if neither spouse is covered by a workplace retirement plan, all contributions are deductible.

Income limits for Roth IRA contributions

Roth IRA contributions aren’t deductible. Your MAGI will determine your eligibility for a Roth and whether your contributions will be phased out after exceeding certain income thresholds.

If your filing status is single or head of household, Eligibility phases out if MAGI is $138,000 to $152,999, Eligibility ends if MAGI equals or exceeds $153,000.

If your filing status is married filing jointly or qualifying widow(er), Eligibility phases out if MAGI is $218,000 to $227,999, Eligibility ends if MAGI equals or exceeds $228,000.

If your filing status is married filing separately, Eligibility phases out if MAGI is $0 to $9,999, Eligibility ends if MAGI equals or exceeds $10,000.

If you didn't live with your spouse at any time during the year, your contributions are the same as "single" filing status.

Spousal IRA contributions

To contribute to an IRA, you generally need to earn an income from a job or self-employment. An exception for married couples: a working spouse can contribute earned income to an IRA for the nonworking spouse.

This spousal IRA can be either a traditional or Roth, and the same deductibility and contribution limits still apply for each.

Employer-based retirement plans

Such as 401(k), 403(b) and most 457(b) plans

Maximum yearly amount you can contribute:

$22,500, up to age 49

$30,000, age 50 and older

$3,000, Additional annual contribution for workers with 15 or more years of service at the same employer, allowed by certain public or nonprofit employers with 403(b) plans. Lifetime cap of $15,000.

$45,000, Maximum annual catch-up contribution, allowed by some state/local government employers, for workers within three years of a 457(b) plan’s normal retirement age.

Self-employed or Small Business Plans

SEP IRA, Maximum annual contributions are $66,000 or 25% of pay, whichever is less. Annual catch-up contributions; age 50 or older is not allowed.

Solo 401(k), Maximum annual contributions is $66,00. Annual catch-up contributions; age 50 or older is $7,500.

SIMPLE IRA, Maximum annual contributions is $15,500. Annual catch-up contributions; age 50 or older is $3,500.

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© January 2023, Future US LLC