The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023. The 2023 limits are contained in Notice 2022-55, released Oct. 21.
The limits for 2023 are as follows.
The limitation under Code Section 402(g)(1) on the exclusion for elective deferrals described in Code Section 402(g)(3) is $22,500 for 2023.
The limitation on deferrals under Code Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is $22,500 for 2023.
The applicable dollar amount under Code Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased to $116,000 for 2023. The applicable dollar amount under Code Section 219(g)(3)(B)(ii) for all other taxpayers who are active participants (other than married taxpayers filing separate returns) is increased from to $73,000. If an individual or the individual’s spouse is an active participant, the applicable dollar amount under Code Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Code Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased to $218,000.
Under Code Section 219(g)(2)(A), the deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan (or another retirement plan specified in section 219(g)(5)) and have adjusted gross income (AGI) between $73,000 and $83,000. For married couples filing jointly, if the spouse who makes the IRA contribution is an active participant, the income phase-out range is between $116,000 and $136,000. For an IRA contributor who is not an active participant and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $218,000 and $228,000. For a married individual filing a separate return who is an active participant, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The AGI limitation under Code Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased to $218,000 for 2023. The AGI limitation under Code Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased to $138,000. The applicable dollar amount under Code Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
Under Code Section 408A(c)(3)(A), the AGI phase-out range for taxpayers making contributions to a Roth IRA is:
- between $218,000 and $228,000 for married couples filing jointly;
- between $138,000 and $153,000 for singles and heads of household; and
- remains between $0 and $10,000 for a married individual filing a separate return.
The AGI limitation under Internal Revenue Code Section 25B(b)(1)(A) for determining the retirement savings contributions credit for married taxpayers filing a joint return for 2023 is $43,500; the limitation under Code Section 25B(b)(1)(B) is $47,500; and the limitation under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased to $73,000.
The AGI limitation under Code Section 25B(b)(1)(A) for determining the retirement savings contributions credit for taxpayers filing as head of household is increased to $32,625; the limitation under Code Section 25B(b)(1)(B) is increased to $35,625; and the limitation under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased to $54,750.
The AGI limitation under Code Section 25B(b)(1)(A) for determining the retirement savings contributions credit for all other taxpayers is increased to $21,750; the limitation under Code Section 25B(b)(1)(B) is increased to $23,750; and the limitation under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased to $36,500.
The limitation on the annual benefit under a defined benefit plan under Code Section 415(b)(1)(A) for 2023 is $265,000.
For a participant who separated from service before Jan. 1, 2023, the limitation for defined benefit plans under Code Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2022, by 1.0833.
The limitation for defined contribution plans under Code Section 415(c)(1)(A) is $66,000.
The dollar amount under Code Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period is $1,330,000. The dollar amount used to determine the lengthening of the five-year distribution period is $265,000.
The dollar limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan for 2023 is $215,000.
The deductible amount under Code Section 219(b)(5)(A) for an individual making qualified retirement contributions for 2023 is $6,500.
Past Limits
Here is a look at past limits from recent years as a handy resource and tool for comparison.
Previous Benefits Limits
| Limit | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 |
| Exclusion for elective deferrals under Code Section 402(g)(3) | $20,500 | $19,500 | $19,500 | $19,000 | $18,500 | $18,000 |
| Code Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations | $20,500 | $19,500 | $19,500 | $19,000 | $18,500 | $18,000 |
| Annual benefit under a Code Section 415(b)(1)(A) DB plan | $245,000 | $230,000 | $230,000 | $225,000 | $220,000 | $215,000 |
| DC plans under Code Section 415(c)(1)(A) | $61,000 | $58,000 | $57,000 | $56,000 | $55,000 | $54,000 |
| Amount under Code Section 409(o)(1)(C)(ii) for determining the maximum balance in an ESOP subject to a five-year distribution period | $1,230,000 | $1,165,000 | $1,150,00 | $1,130,000 | $1,105,000 | $1,080,000 |
| The dollar amount used to determine the lengthening of the five-year distribution period | $245,000 | $230,000 | $230,000 | $225,000 | $220,000 | $215,000 |
| Limitation under Code Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan under Code Sections 401(k)(11) or 408(p) | $6,500 | $6,500 | $6,500 | $6,000 | $6,000 | $6,000 |
| Limitation under Code Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan under Code Sections 401(k)(11) or 408(p) for individuals aged 50 or over | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
| Limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan | $200,000 | $185,000 | $185,000 | $180,000 | $175,000 | $175,000 |
| Individual making qualified retirement contributions | $6,000 | $6,000 | $6,000 | $6,000 | $5,500 | $5,500 |
Phase Out Range for Deduction by an IRA Contributor not Covered by a Plan and Married to Someone Who Is Covered
| 2022 | 2021 | 2020 | 2019 |
| $204,000 and $214,000 | $198,000 and $208,000 | $196,000 and $206,000 | $193,000 and $203,000 |
Past AGI Phase-Out Ranges for Taxpayers Making Contributions to a Roth IRA
| Limit | 2022 | 2021 | 2020 | 2019 |
| married couples filing jointly | $204,000 to $214,000 | $198,000 to $208,000 | $196,000 to $206,000 | $193,000 to $203,000 |
| singles and heads of household | $129,000 to $144,000 | $125,000 to $140,000 | $124,000 to $139,000 | $122,000 to $137,000 |
Past AGI Limits for Savers Credit
| Limit | 2022 | 2021 | 2020 | 2019 |
| married couples filing jointly | $68,000 | $66,000 | $65,000 | $64,000 |
| heads of household | $51,000 | $49,500 | $48,750 | $48,000 |
| married individuals filing separately | $34,000 | $33,000 | $32,500 | $32,000 |
| singles | $34,000 | $33,000 | $32,500 | $32,000 |
Previous Compensation Limits
| Limit | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 |
| Annual compensation limit under Code Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) | $305,000 | $290,000 | $285,000 | $280,000 | $275,000 | $270,000 |
| Limitation used in the definition of a highly compensated employee | $135,000 | $130,000 | $130,000 | $125,000 | $120,000 | $120,000 |
| Annual compensation limitation for eligible participants in certain governmental plans | $450,000 | $430,000 | $425,000 | $415,000 | $405,000 | $400,000 |
| Compensation amount under Code Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) | $650 | $650 | $600 | $600 | $600 | $600 |
| Compensation amount under Treas. Reg. §1.61 21(f)(5)(i) concerning the definition of “control employee” for fringe benefit valuation | $120,000 | $115,000 | $115,000 | $110,000 | $110,000 | $105,000 |
| Compensation amount under Treas. Reg. §1.61 21(f)(5)(iii) | $245,000 | $230,000 | $230,000 | $225,000 | $220,000 | $215,000 |
The 2023 Limits
The limits, and Notice 2022-55, are available here.
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