Retirement Contribution Limits and Medicare Premium Changes for 2023
Due to the rising cost of living and other factors, government agencies routinely assess available data and then release changes to various contribution limits and the cost of Medicare premiums. These changes are announced toward the end of each year and take effect in January of the following year. Here’s what you need to know as we approach 2023.
Changing contribution limits to retirement plans. Those saving for retirement can now contribute a bit more to their 401k, 403b, Thrift Savings Plan, or most 457 plans. The new annual limit is $22,500, plus an additional catch-up contribution of $7,500 for those over age 50.
For IRAs, the contribution limit has been raised from $6,500 to $7,500, with an additional catch-up contribution of $1,000.
New Medicare premiums. Of course, once you’ve reached retirement age, the cost of healthcare might consume a significant portion of your budget. We have good news for those of you enrolled in Medicare: The standard Part B premium will decrease just a bit, from 170.10 this year to $164.90 in 2023.
A small number (about seven percent) of Medicare beneficiaries will pay higher premiums, due to their higher annual incomes. Contact your Medicare broker to learn about your own Medicare premium amount.
Contributions to health savings accounts. For those enrolled in high-deductible healthcare plans, contributions to health savings accounts represent a valuable opportunity to save for out-of-pocket healthcare expenses. You can also enjoy certain tax benefits for doing so. The good news is that in 2023, you can now save a bit more in your HSA: Up to $3,850 for individuals and $7,750 for those on family plans.
Contributions to flexible spending accounts. You can now stash up to $3,050 in your health flexible spending account, an employer-sponsored account that allows you to pay for uncovered healthcare expenses without owing income taxes on that money.
If you have questions about any of these benefit plans, or on how the new Medicare premiums might impact you, give us a call. One of our benefits specialists will be happy to help.