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2023 Cost-of-Living Adjustments (COLAs)

2023 Cost-of-Living Adjustments (COLAs)

This week, the IRS announced the 2023 cost-of-living adjustments (COLAs), which impact retirement plans for more than 67 million Americans. In addition, the Social Security Administration announced the 2023 social security wage base will be $160,200, which reflects a $13,200 increase from 2021.

Most of the 2023 limitations increased substantially, although few of them stayed the same. We’ve compiled a side-by-side comparison on the dollar limitations for benefits and contributions for the past three years. Contact your BMF Advisor if you have questions on these dollar limitations or to discuss your 2022 tax planning strategy.

Read more about the Social Security Cost-of-Living adjustment for 2023.

202320222021

401(k), 403(b), 457 Contributions

Elective Deferrals$ 22,500$ 20,500$ 19,500
Catch-Up Contributions7,5006,5006,500

IRAs

IRA Contributions6,5006,0006,000
IRA Catch-Up Contributions1,0001,0001,000

SIMPLE Plan

Elective Deferrals15,50014,00013,500
Catch-Up Contributions3,5003,0003,000

Simplified Employee Pensions (SEPs)

Minimum Compensation 408(k)(2)(c)750650650
Maximum Compensation 408(k)(3)(c)330,000305,000290,000
Maximum Contribution66,00061,00058,000

401(k), 403(b), 457 Plans

Annual Compensation 401(a)(17)/404(I)330,000305,000290,000
Defined Contribution Limits 415(c)(1)(A)66,00061,00058,000
ESOP Limit 409(o)(1)(c) – account balance1,330,0001,230,0001,165,000
ESOP Limit 409(o)(1)(c) – lengthening 5-year period265,000245,000230,000

Miscellaneous

Highly Compensated Employee150,000135,000130,000
Defined Benefit Annual Limit265,000245,000230,000
Key Employee Compensation215,000200,000185,000
Social Security Taxable Wage Base160,200147,000142,800

Cindy H. Mitchell?>

CPA
Director, Taxation Services
330.255.2454

Melissa G. Dunham?>

CPA, MTax, MBA
Senior Manager, Taxation Services
330.255.2455
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About the Authors

Cindy H. Mitchell
Cindy H. Mitchell
CPA
Director, Taxation Services
330.255.2454
Melissa G. Dunham
Melissa G. Dunham
CPA, MTax, MBA
Senior Manager, Taxation Services
330.255.2455

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