Save even more for retirement in 2023 due to record breaking increases in limits. On October 21, 2022, the IRS announced the Cost of Living Adjustments (COLAs) affecting the dollar limitations for retirement plans for 2023. Retirement plan limits increased well over the 2022 limits, the largest increase in over 45 years. COLA increases are intended to allow participant contributions and benefits to keep up with the “cost of living” from year to year. Here are the highlights from the new 2023 limits:

The calendar year elective deferral limit increased from $20,500 to $22,500.

The elective deferral catch-up contribution increased from $6,500 to $7,500. This contribution is available to all participants aged 50 or older in 2023.

The maximum available dollar amount that can be contributed to a participant’s retirement account in a defined contribution plan increased from $61,000 to $66,000. The limit includes both employee and employer contributions as well as any allocated forfeitures. For those over age 50, the annual addition limit increases by $7,500 to include catch-up contributions.

The maximum amount of compensation that can be considered in retirement plan compliance has been raised from $305,000 to $330,000.

Annual income subject to Social Security taxation has increased from $147,000 to $160,200.

See chart titled Annual Plan Limits:

Annual Plan Limits	2023	2022	2021
Contribution and Benefit Limits
Elective Deferral Limit	$22,500	$20,500	$19,000
Catch-Up Contributions	$7,500	$6,500	$6,500
Annual Contribution Limit	$66,000	$61,000	$58,000
Annual Contribution Limit including Catch-Up Contributions	$73,500	$67,500	$64,500
Annual Benefit Limit	$265,000	$245,000	$230,000
Compensation Limits
Maximum Plan Compensation	$330,000	$305,000	$290,000
Income Subject to Social Security	$160,200	$147,000	$142,800
Key EE Compensation Threshold	$215,000	$200,000	$185,000
Highly Compensated EE Threshold	$150,000	$135,000	$130,000
IRA Limits
SIMPLE Plan Elective Deferrals	$15,500	$14,000	$13,500
SIMPLE Catch-Up Contributions	$3,500	$3,000	$3,000
Individual Retirement Account (IRA)	$6,500	$6,000	$6,000
IRA Catch-Up Contribution	$1,000	$1,000	$1,000