The IRS recently announced that the 2023 contribution limit for 401(k) plans will increase to $22,500 which is 9 percent more than last year 2022 contribution limit for 401(k) plan.Similaraly , a whole lots of cost‑of‑living adjustmentsto various pension plans and other retirement-related savings are done for the tax year 2023. We have used this chart for creating a contribution limit calculator for self employed person.
Retirement Pension Plans Limits 2023 & 2022
| Provision | 2023 limit | 2022 Limits |
|---|---|---|
| Maximum 401(k) contributions | $22,500 | $20,500 |
| Maximum compensation limit | $330,000 | $305,000 |
| Highly compensated employees Earning (in previous year) more than | $150,000 | $135,000 |
| Key employee compensation limit | $215,000 | $200,000 |
| Annual contribution limit for defined contribution plans | $66,000 | $61,000 |
| Annual benefit limit for defined benefit plans | $265,000 | $245,000 |
| SIMPLE plan limit | $15,000 | $14,000 |
| Age 50 and older catch-up contribution limit All plans other than SIMPLE plans SIMPLE plans | $7,500 $3,500 | $6,500 $3,500 |
| Annual contribution limit for Section 457 deferred compensation plans (government and tax-exempt organizations) | $22,500 | $20,500 |
| Employee stock ownership plan (ESOP) Maximum account balance subject to five-year distribution period Each incremental dollar amount in excess of account balance that adds one year to five-year distribution period | $1,330,000 $265,000 | $12,30,000 $245,000 |
| Simplified employee pension (SEP) plans Contributions must be made for employees earning at least | $750 | $650 |
| 409A minimum specified employee (officer) compensation requirement | $215,000 | $200,000 |
| 409A involuntary separation pay exception | $660,000 | $600,000 |
If you have questions about the information covered in this alert, please contact a member of your Cooley team or one of the lawyers from the compensation & benefits group listed below.