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2023 Limits and Threshold Updates

Financial Planning Insights

As we now move into 2023, we wanted to share some important reminders and deadlines as it pertains to your personal financial considerations.

2023 Retirement Plan Limits

  • Maximum elective deferral to a 401(k), i401(k), 403(b), 401(a), and 547 plans is $22,500 with a $7,500 catch-up contribution for those aged 50 and older.
  • Maximum contribution to a SIMPLE plan is $15,500 with a $3,500 catch-up contribution for those aged 50 and older.
  • Per 'SECURE Act 2.0' (SGK will be releasing a separate content piece highlighting some key changes), starting in 2024, catch-up contributions are limited only to ROTH accounts for workers with wages greater than $145,000
  • Deadline for self-employed plans employer contribution is your tax filing deadline

2023 IRA and Roth IRA Limits and Income Thresholds

  • Maximum contribution is $6,500 with a $1,000 catch-up contribution for those aged 50 and older
  • Deductible Traditional IRA contributions are phased out with modified adjusted gross income (MAGI) between $73,000 - $83,000 for single filers, and MAGI between $116,000 - $136,000 for those married filing jointly
  • Roth contributions are phased out between MAGI of $138,000 - $153,000 for single filers and $218,000 - $228,000 for those married filing jointly.
  • Roth conversions must be completed by December 31
  • For now, Backdoor Roth contributions are still allowed, and may be executed up until the filing deadline for the prior year. Legislation in congress continues to be discussed potentially eliminating Backdoor Roth contributions in the future
  • Per 'Secure Act 2.0' (SGK will be releasing a separate content piece highlighting some key changes), Required Minimum Distributions (RMDs) will now begin at age 73. If this will be your first year of taking RMDs, you have the option to delay up until your tax filing deadline in 2024.
  • If this is not your first year of RMDs, unless we have made other arrangements for your withdrawal, your distribution will be processed in November
  • The Financial Planning Team is able to assist in creating and implementing an optimal savings strategy

2023 Gifting Limits and Strategies

  • Annual gift tax exclusion is $17,000
  • Estate and gift tax basic exclusion and generation skipping exemption is $12,920,000
  • Gifting strategies include gifting highly appreciated stock, Qualified Charitable Distributions (QCDs) from your IRA, contributions to 529 plans, and cash gifts
  • The Financial Planning Team is able to advise on tax-efficient gifting strategies tailored to your specific situation

2023 Friendly Reminders

  • If you turn 65 this year, it is time to enroll in Medicare. The Initial Enrollment Period begins 3 months before your 65th birthday month and ends 3 months after your 65th birthday
  • Health Savings Account (HSA) contribution limits are $3,850 for singles and $7,750 for families
  • Again, be on the lookout from more correspondence from the team regarding the recent passing of 'Secure Act 2.0' and some of the ramifications of the legislation
  • While there was discussion about changes to income tax brackets and capital gains tax, aside from adjustments for inflation, no changes were made for 2023
  • If you are anticipating a significant increase or decrease in your income in 2023, the Financial Planning Team can help discuss the implications and considerations moving forward.

IMPORTANT DISCLOSURE INFORMATION

For general informational purposes only. Subject to change without notice. There can be no assurance that any of the above content will be applicable for your individual situation, or that any financial planning or consulting services provided by provided by Steigerwald, Gordon & Koch, Inc. (“SGK”) will prove successful. SGK is neither a law firm, nor a certified public accounting firm, and no portion of its services should be construed as legal or accounting advice. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from SGK. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request or at www.sgkwealthadvisors.com. The scope of the services to be provided depends upon the needs and requests of the client, and the terms of the engagement. Please Remember: If you are a SGK client, please contact SGK, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.