Last month, the IRS announced that in 2023, for the first time since 2019, the annual contribution limits for the Roth individual retirement account (IRA) are getting a boost. So now is the time to start planning ahead so that you can maximize your retirement investing potential.
A good time to get serious about retirement planning
Next year, the annual contribution limit for Roth IRA will jump to $6,500, up from $6,000 in 2022. So you can tuck away roughly $542 every month if you are eligible to contribute the maximum amount.
As has been the case, there’s also a bonus for savers over a certain age. After you turn 50, you can tack on up to $1,000 more in “catch-up contributions,” bringing your contribution limit up to $7,500. However, you can’t dedicate more to a Roth IRA in a given year than you earn in that year. So if you earn less than $7,500 in 2023 — say, for example, that you make $5,000 from part-time work — your Roth IRA contribution would be limited to your taxable compensation.
If you look at the Roth IRA contribution limits from 2016 to 2023, you’ll understand why next year’s increase is a big deal. Boosts to the limit don’t happen often.
|Year||Roth IRA contribution limit (savers under 50)||Roth IRA contribution limit (savers 50 and over)|
You can start making contributions that count for 2023 on Jan. 1, 2023, and you’ll be able to keep doing so for that tax year until April 15, 2024. Keep in mind also that the Roth IRA contribution limits also apply to traditional IRAs. However, if you decide to contribute to both types of…
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