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 1. Individuals
 2. Build Your Knowledge
 3. What are the 2023 retirement contribution limits and income restrictions?




WHAT ARE THE 2023 RETIREMENT CONTRIBUTION LIMITS AND INCOME RESTRICTIONS?

Putting away as much as possible—in as many ways as you can—for the future may
have huge long-term value. In 2023, IRS changes to max retirement account
contributions make it possible to put more money in your savings.


MAX 2023 RETIREMENT CONTRIBUTION AMOUNTS AT A GLANCE

The IRS increased 2023 contribution limits for 401(k)s, 403(b)s, and IRAs. Some
retirement plans have lower limits, so check the details of your allowable
contributions. Generally, your human resources or benefits department is a good
place to start.

Account2023 contribution limit Employer-sponsored plan such as 401(k), 403(b)
$22,500 Individual retirement account (IRA) $6,500 Roth IRA $6,500

Catch-up contributions for 401(k)s and 403(b)s for people age 50 and older also
increased to $7,500, but not for IRAs and Roth IRAs. Those remain at $1,000.

Tip:If your employer offers a matching contribution in its 401(k) plan, aim to
set aside at least enough to get that match.


UPDATES TO TAX DEDUCTION LIMITS AND INCOME LIMITS FOR IRA AND ROTH IRA
CONTRIBUTIONS

If you’re already contributing to a retirement savings plan at work, such as a
401(k) or 403(b), you can also contribute to an IRA. But there are some caveats.

While there’s no phase-out income limit for IRAs—generally anyone making any
amount of income can open and contribute to an IRA—the same isn’t true for Roth
IRAs (which are made with after-tax dollars). And if you’re hoping to deduct
your IRA contributions on your taxes, income limitations apply here too. For
2023, those income ranges increased for both traditional IRAs and Roth IRAs. Get
the details on IRA contribution and deduction limits on the IRS website.

Phase-out income limits

 * IRA: None
 * Roth IRA: Single/head of household: $138,000 to $153,000; married filing
   jointly: $218,000 to $228,000

Tax deduction limit

 * IRA: Full, partial, or no deduction based on income level and retirement plan
 * Roth IRA: Not deductible

Tip: Learn how to gradually increase your retirement savings contributions.


INCREASED 2023 HSA CONTRIBUTION LIMITS

The IRS also increased HSA contribution limits for 2023 for both individuals and
families (see below). As a reminder: A health savings account (HSA) helps those
with high-deductible health plans save taxes on money earmarked for medical
expenses not covered by the plan. But unlike a flexible spending account (FSA),
the assets you contribute to an HSA can be rolled over each year. Plus, an HSA
offers a triple tax advantage: Money put in isn’t taxed and grows tax-free, and
you’re not taxed when you withdraw funds for qualified medical expenses.

Coverage type2023 HSA limit Self coverage $3,850 Family coverage $7,750


NEXT STEPS

 * How are you progressing toward your retirement goals? Log in to your
   Principal account to see if you can increase your contributions. Don’t have
   an employer-sponsored retirement account? We can help you set up your own
   retirement savings.

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Principal® does not make available products related to Health Savings Accounts.

The subject matter in this communication is educational only and provided with
the understanding that Principal® is not rendering legal, accounting, investment
or tax advice. You should consult with appropriate counsel, financial
professionals, and other advisors on all matters pertaining to legal, tax,
investment or accounting obligations and requirements.

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