IRS Announces Contribution Limits for 2023
The IRS has released the new contribution limits for retirement accounts beginning in 2023. Inflation is currently at a 40-year high. As a result, we’re seeing some of the largest contribution limit increases ever. This is a great opportunity to save more for retirement while also lowering your tax bill.
This is also a year-end reminder to check your year-to-date contributions as a way of making sure you’re maxing out accounts for 2022. We’ve summarized below the 2022 and 2023 limits for the most commonly funded accounts.
Traditional IRA/Roth IRA
IRAs received an increase on the base contribution amount; however, there was no increase to the age 50+ catch up contribution limit.
2022: $6,000 | Age 50+ Catch-up: $1,000
2023: $6,500 | Age 50+ Catch-up: $1,000
Health Savings Account (HSA)
single
2022: $3,650 | Age 55+: $1,000
2023: $3,850 | Age 55+: $1,000
family
2022: $7,300 | Age 55+: $1,000
2023: $7,750 | Age 55+: $1,000
401(k) limits for Microsoft, Google, & Meta (Facebook)
If you work for one of the following large tech companies, take note below to see increases to your employer match & the ability to contribute on an after-tax basis.
2022
Pre-tax/Roth: $20,500
50% Employer Match: $10,250
After-Tax: $30,250
Total: $61,000
2023
Pre-tax/Roth: $22,500
50% Employer Match: $11,250
After-Tax: $32,250
Total: $66,000
Age 50+ Catch-up
2022: $6,500
2023: $7,500
*The age 50+ catch-up is above and beyond the total $61k in 2022 and $66k in 2023.
**Catch-up contributions are added to the pre-tax/Roth bucket, not the after-tax bucket.
***Employer match does not apply to age 50+ catch-up contributions.
Contributing to the Amazon 401(k) plan
Calculating the contribution for your Amazon 401(k) is slightly different as Amazon contributes 50% of every 1% of your salary that you contribute, up to a cap of 4%. That works out to a 2% match so long as you contribute 4% of your salary. The amount that you can contribute to the after-tax portion of your 401(k) will vary from employee to employee as your salary varies. You simply want to calculate your after-tax limit by multiplying your salary by 2% and then subtracting it from $43,500 in 2023.
*Take note that the annual compensation limit for 2023 is $330k (up from $305k in 2022). Amazon’s match is based on this, so if you make the new base cap of $350k your 2% match is on the first $330k of salary.
2022
Pre-tax/Roth: $20,500
50% Employer Match: 2% of your Salary
After-Tax: ($40.5k – 2% of salary)
Total: $61,000
2023
Pre-tax/Roth: $22,500
2% Match: 2% of Salary
After-Tax: ($43.5k – 2% of salary)
Total: $66,000
Age 50+ Catch-up
2022: $6,500
2023: $7,500
*The age 50+ catch is above and beyond the total $61k in 2022 and $66k in 2023.
**Catch-up contributions are added to the pre-tax/Roth bucket, not the after-tax bucket.
***Employer match does not apply to age 50+ catch-up contributions.
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