401(k) News and Investing July 2023

If you are not on a path to maxing out your plan contribution this year, there still is time in the second half of the year to contribute the maximum allowed by year-end. See your human resources person to adjust your payroll contribution to the maximum amount. 401(k) contributions allow an employee to contribute a portion of their wages to their individual C. Mack Solutions 401 (k) plan account. Contributing to your 401(k) account lowers your taxable income and thereby taxes! Elective salary deferrals are deducted from your paycheck before taxes (except for designated Roth deferrals) and conveniently deposited into your C. Mack Solutions 401(k) plan account.

The amount individuals can contribute to their 401(k)-plan account in 2023 increased to $22,500 -- up from $20,500 for 2022. If you still have disposable income after maxing out your 401(k) contributions, you can also contribute to your Individual Retirement Account. Contact Patrick Byrne at aspetuckfin@optonline.net or 203-226-5733 if there is interest in discussing your IRA account options and retirement planning.

Highlights of 2023 changes:

The contribution limit for employees who participate in 401(k) increased to $22,500.
The limit on annual contributions to an IRA increased to $6,500. The IRA catch‑up contribution limit for individuals aged fifty and over is not subject to an annual cost‑of‑living adjustment and remains $1,000.
The catch-up contribution limit for employees aged fifty and over who participate in 401(k) increased to $7,500.

The phase‑out ranges for deducting contributions to a traditional IRA will also increase. Taxpayers should review Notice 2022-55 regarding the details of 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.

Source: IRS.