2023 Inflation Adjustments for Pension Plans & Retirement Accounts

The IRS recently released the 2023 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions. In general, many of the pension plan limitations will change for 2022 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged. 

Highlights of 2023 Changes

The contribution limit has increased from $20,500 to $22,500 for employees who take part in:

The annual limit on contributions to an IRA increased from $6,000 to $6,500. The 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 income ranges increased for determining eligibility to make deductible contributions to:

Phase-Out Ranges

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse takes part in a retirement plan at work depending on the taxpayer’s filing status and income.

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $73,000 to $83,000, up from between $68,000 and $78,000.
  • For joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the phase-out range is $116,000 to $136,000, up from between $109,000 and $129,000.
  • For an IRA contributor, who is not covered by a workplace retirement plan but their spouse is, the phase out is between $218,000 and $228,000, up from between $204,000 and $214,000.
  • For a married individual covered by a workplace plan filing a separate return, the phase-out range remains between $0 and $10,000.

The phase-out ranges for Roth IRA contributions are:

  • $138,000 and $153,000, for singles and heads of household
  • $218,000 and $228,000, for joint filers
  • $0 to $10,000 for married separate filers

The income limit for the Saver’ Credit is:

  • $73,000 for joint filers
  • $54,750 for heads of household
  • $36,500 for singles and married separate filers

Lastly, the amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000.

Scroll to Top