The 2023 catch-up contribution limit for employees aged 50 and over who participate in the Thrift Savings Plan (TSP) is increasing to $7,500, up from $6,500 in 2022. This is an increase of 15.4% over last year. Consequently, the total amount that federal employees who utilize the catch up contribution can contribute to their TSP accounts in 2023 will be $30,000.
2023 IRA Contribution Limits
The 2023 IRA annual contribution limit is increased to $6,500, up from $6,000 in 2022. This is an increase of 8.3% over last year. The IRA catch up contribution limit for individuals aged 50 and over is not subject to an annual cost of living adjustment and remains $1,000. Individuals who utilize this option can contribute a total of $7,500 per year to an IRA in 2023.
2023 Roth IRA Income Phase-Out Ranges
- The income phase-out range for taxpayers making contributions to a Roth IRA is increasing in 2023 to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000 in 2022.
- For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
- The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
2023 Traditional IRA Income Phase-Out Ranges
According to the IRS, taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)
These are the traditional IRA phase-out ranges for 2023:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000 in 2022.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000 in 2022.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000 in 2022.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
Past Annual TSP Contribution Limits
Inflation has been rising rapidly in 2022, hitting 8.2% for the year so far as of the time of this writing. It is actually much higher in many areas though. Anyone who has been to the grocery store recently, for instance, can attest to that. The cost of turkey for Thanksgiving in 2022, for example, is expected to be 73% higher than it was last year.
Because inflation has been rising so much over the last two years, it is pushing the annual TSP contribution limits higher since they are subject to annual cost of living adjustments. The annual TSP contribution limit has risen 28.6% since 2013. It has increased 15.4% just in the last two years (2021-2023), accounting for a little over half of the increase.
The table below shows the annual TSP limits for the past 10 years.
|Year||Annual Contribution Limit||Catch-Up Contribution Limit||Total|