Are you maxing out your retirement contributions every year? Then you’ll want to read this.
Benefits consulting firm Mercer recently released its forecast for next year’s annual contribution limits, and its projections indicate that limits will see unprecedented increases in 2023.
Just how much higher are the limits expected to be?
For the 2022 calendar year, employees over age 50 may contribute up to $27,000 to their 401(k), 403(b), and eligible 457 plans. That includes the standard $20,500 limit for workers of any age, plus an additional $6,500 in “catch-up” contributions for workers age 50 or better.
For 2023, Mercer predicts that the standard employee elective contribution limit will rise to $22,500 and the age-50+ catch-up contribution limit will increase to $7,500. If these projections bear out, that means that workers age 50 or older may contribute up to $30,000, making them the highest annual limit increases in history (the increases from 2020 to 2021 were the second-highest ever, at that time).
Mercer’s projections are calculated using the Internal Revenue Code’s cost-of-living adjustment and rounding methods; the consumer price index for all urban consumers (CPI-U) through June 2022; and the CPI-U estimates for July, August, and September.
The IRS releases the official annual contribution limits every fall, usually sometime in late October or early November. Until then, keep putting that money away—and start thinking of ways to bump your contributions for next year.
If you’d like to max out your retirement contributions, but have no idea how you’ll manage it, don’t fear. Our advisors are here to assist you! Just click here to schedule a no-cost, no-obligation consultation and an evaluation of your current financial plan.