 Internal Revenue Service RRS Tax News Taxpayers should review the 401k and IRA IRA limit increases for 2023 KIRS, I'll check my IRA K? What does K even mean? Oh well K is like OK, except OK is way too long, so I totally just cut it in half to just K Is that K with you, man? I also don't put commas before the last item in lists because it takes way too much time and space What? A list is supposed to have a comma after each and every item in the list, that's the rules K, UL, whatevs? Whatevs? What the heck is whatevs? Honestly, I thought it was bad when people stopped speaking in full sentences, but now we don't even speak in like full words or even full abbreviations, it's gone too far, this is not K, I mean OK, this is not OK, I mean, you know, OK is OK, but K is not OK, K is just K, which is meaningless, but first a joke Sometimes while watching classic old movies on the streaming services these days, I feel like they've changed things a bit I don't have time to be proper, I want to live, I'm a woman, I like men, that means I'm not ladylike, then I guess I'm just not a lady, at least I'm honest You're different, no arguing that, it's your lady all right, I'll take my oath on it Now I mean honestly, I don't remember Wyatt Earp having blue hair and lipstick like that before Now you help find him, or I'm taking over command What? A female leading my herd? I tell you preposterous I guess making woke remakes was costing too much money or something Don't rush me sonny, you rush a miracle man, you get rotten miracles So like, they thought they would just touch up the originals a bit You got money? 65 And nobody would notice because of their spectacular green screen abilities I never worked for so little, except once, and that was a very noble cause This is noble sir As demonstrated by the She-Hawk D-plus show Still in control and the overwhelming feelings of rage No, a normal amount of rage You do revert back to gen4 when you sleep I mean it's kind of sad how once great artistic production studios Seem to be competing in quality with like 19 year old kids Working off a gaming computer like in their family's garage IRS tax tip 2022-178 November 21st 2022 The amount individuals can contribute to their 401k plans in 2023 Will increase to $22,500 up from $20,500 for 2022 The income ranges for determining eligibility to make deductible contributions to Traditional IRAs, IRAs, contribute to Roth IRAs, IRAs, and claim the savers credit Will also all increase for 2023 So just a quick recap on these types of plans Note that if you are working for an employer One of the biggest benefits that you might have access to And if you do that would be great would be the 401k plan Giving incentive to put money into the umbrella of in essence a 401k plan Now remember you kind of want to think of the 401k plan as basically A set of investments that are usually going to be like mutual funds For example that are under the umbrella of the 401k plan So there's nothing really special about the investment tool itself Other than the fact that the investment tool typically some kind of mutual fund Is under the umbrella of a 401k plan And therefore, and the only reason you would do this Is to get a tax benefit when you put the money in So that when you get your W-2 typically box one Will have decreased the contributions that you put into the plan Thereby lowering your taxable income Thereby decreasing the tax that you're going to pay You also could have contributions from the employer On the 401k plan which is great as well However you can only really benefit from these plans If you have the capacity the savings to put money into the 401k plan So you got to have the cash flow And then once you have the cash flow Then the question is well how much how can I maximize out the cash flow Typically now note that the IRA is usually there for people That don't have access to the 401k plan So the general rule is if you can max out the 401k plan Try to max out the 401k plan If you don't have access to a 401k plan but still have cash flow Then you might want to consider putting money into an IRA Which gives you a similar type of tax benefit Although the thresholds and limitations on how much you can put in are different Also note that if you're looking at a Roth situation That would be a situation where you're saying Hey look maybe I'm not making much money right now But for whatever reason I have cash flow So what I would like to do now is not decrease my taxes Today but rather put money in the most advantaged position I can For savings like even if they didn't give me a tax benefit Clearly we would still want to save for retirement But if they're going to give me a benefit How can I put money away at this point Given the fact that I'm not paying much taxes And more likely to be paying taxes during retirement Well then you might put it into a Roth IRA In that kind of situation Because the Roth IRA is you're still going to pay taxes on it now But when you pull the money out It's not going to be taxable Ideally when you're in retirement You'd like to have some money in a Roth Or something that's not going to be taxable When you pull it out and possibly some money under the umbrella Of an IRA or 401k plan So that you can live off what you're pulling out And still have a fairly low taxable income Because some of the stuff that you're pulling out Is not directly from an IRA Which is going to be subject to tax or a 401k plan Okay so those are the general concepts So taxpayers can read the technical guidance Regarding all of the cost of living adjustments Affecting dollar limitations For pension plans and other retirement related items For tax year 2023 Notice 2022-55 on irs.gov And I'm sure the Biden administration Will try to take credit for all increases And these kind of things that kicked in Automatically due to inflation happening Oh look I increased the automatic inflation adjustments upward How did you do that? You made inflation Anyway here are some of the changes for 2023 The contribution limit for employees Who participate in 401k, 403b That's usually the kind of plan that you might see At like a public employee as opposed to a private sector Most 457 plans and the federal government's Savings plan will increase to 22,500 The limit on annual contributions to an IRA IRA will increase to 6,500 The IRA catch up contribution limit For individuals aged 50 and over Is not subject to an annual cost of living adjustment And remains $1,000 The catch up contribution limit for employees Age 50 and over who participate in 401k, 403b Most 457 plans and the federal government's Thrift saving plan will increase to $7,500 The catch up contribution limit for employees Age 50 and over who participate in simple S-I-N-P-L-E plans The type of retirement plan for small businesses In general will increase to $3,500 Up from $3,000 The phased out ranges for deducting contributions To a traditional IRA will also increase So when you put money into an IRA Then it gets kind of complicated Because there's going to be phase outs In terms of your income And it gets a little bit complicated If you have the capacity to also put money Into a 401k plan The question is can you still put money into an IRA It would be nice if you kind of could Because when you put money into a 401k plan You have to do it before year end So you would like to max out whatever You have the cash flow to do at this point in time And then the IRA you usually have until The filing of the tax return April 15th Not including extensions So it's kind of nice to be able to do that last minute Tax planning after the year end And see if you have the cash flow and the capacity To put more money in with the IRA But it gets complicated because even if You have a spouse that has a 401k plan That could have some impacts in terms of Your maximum contributions That along with your income levels So tax software is quite useful In those situations to help you With that last minute tax planning type of thing Taxpayers should review notice 2022-55 Regarding the details for their situation The income phase out range for people Making contributions to a Roth IRA Will increase for taxpayers filing as single Head of household and married filing jointly Again, taxpayers should consult notice 2022-55 For specifics about their situation The income limit for the saver's credit For low and moderate income workers is $73,000 For married couples filing jointly $54,750 for heads of household And $36,500 for singles and married individuals Filing separately The amount individuals can contribute To their simple S-I-M-P-L-E That's going to be a small business Retirement kind of plan Retirement accounts will increase to $15,500 So if you want to check this out in more detail And look at the links, there'll be a link to this In the description