Limitations Adjusted as Provided in Section 415 (2023)

The IRS, as per Section 415 of the Internal Revenue Code, adjusts dollar limitations for retirement plans annually to account for cost-of-living increases. Here's what you need to know:

Highlights for 2023:

• Defined benefit plan annual benefit limit increased to $265,000.
• Defined contribution plan limit raised to $66,000.
• Exclusion limit for elective deferrals increased to $22,500.
• Compensation limits adjusted for various sections, e.g., $330,000 for sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii).

Other Adjustments:

• Highly compensated employee limit increased to $150,000.
• Catch-up contributions for individuals aged 50 or over adjusted.
• Various compensation amounts and limits under different sections adjusted for tax purposes.

These adjustments are meant to keep up with the rising cost of living, ensuring that the rules around how much you can save and deduct on your taxes stay in line with the changing economy.

For the current year adjustment in tax rates, contribution limits, and retirement-related figures, click here.

To learn more about the changes in retirement plan rules, contribution limits, and income ranges for 2023, take a look at the attached PDF document below.