IRS Boosts 401(k) Limit by Record Amount as U.S. Inflation Surges
Posted on 10/21/2022
Due to rampant U.S. inflation, the Internal Revenue Service (IRS) announced a record increase in contribution limits to 401(k) and other tax-deferred retirement plans for 2023. Starting in 2023, participants will be allowed to contribute up to US$ 22,500 into their 401(k), 403(b), most 457 plans or the Thrift Savings Plan for federal employees. That’s US$ 2,000 more than the current US$ 20,500 federal contribution limit.
However, most 401(k) participants do not save anywhere near the U.S. federal limit. Money manager Vanguard estimates that only 14% of participants maxed out their contributions in 2021. In addition, only 16% of those eligible to make catch-up contributions took advantage.
