Now is the time to review funding your retirement accounts in 2023. Recent cost-of-living calculations mean much higher contribution limits for this year. Plus the higher income phaseouts for eligibility will make many more taxpayers eligible for fully-deductible contributions. So plan now to take advantage of this tax benefit. Here are annual contribution limits for the more popular programs:
How to use
– Identify the the type(s) of retirement savings plans that you currently use.
– Note the annual savings limits of the plan to adjust your savings to take full advantage of the annual contributions. Remember, a missed year is a missed opportunity that does not come back.
– If you are 50 years or older, add the catch-up amount to your potential savings total.
– Take note of the income limits within each plan type.
- For traditional IRAs, if your income is below the noted threshold, your taxable income is reduced by your contributions. The deductibility of your contributions is also limited if your spouse has access to a plan.
- In the case of Roth IRAs, the income limits restrict who can participate in the plan.
If you have not already done so, also consider:
– Setting up new accounts for a spouse or dependent(s)
– Using this time as a chance to review the status of your retirement plan including beneficiaries
– Reviewing contributions to other tax-advantaged plans like Flexible Spending Accounts (health care and dependent care) and prepaid medical savings plans like Health Savings Accounts.
— By Nancy J. Ekrem, CPA
DME CPA Group PC
Certified Public Accountants & Business Consultants