What the 2023 IRA Contribution Limit Increase Means for You


The IRS recently released inflation-adjusted 2023 IRA contribution limits, increasing the contribution limit from $6,000 to $6,500 ($7,500 for participants 50 and older). Similarly, 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan also increased from $20,500 to $22,500.
There have also been adjustments to Roth IRA income limits and traditional IRA deduction limits. The tables below will help you see how these adjustments affect you and your family.
Plus, we’ll provide you with some information regarding alternative investments, a popular choice among investors seeking to diversify their portfolios beyond stocks and bonds.
Roth IRAs are a popular choice for investors due to their tax-free nature. However, higher-income taxpayers are not allowed to contribute to a Roth IRA (unless they choose to do a backdoor Roth IRA conversion.) Roth IRA income limits are dependent on a person’s income and filing status and have increased for the 2023 tax year. Below you will find the new income limits compared to 2022.
For reference, modified adjusted gross income (MAGI) refers to your adjusted gross income (AGI) plus untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.
Roth IRA Income Limits |
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Filing Status | 2022 Modified Adjusted Gross Income (MAGI) | 2023 Modified Adjusted Gross Income (MAGI) | Contribution |
Single, head of household, or married filing separately and you did not live with your spouse at any time during the year | Less than $129,000 | Less than $138,000 | Up to the limit |
$129,000 or more but less than $144,000 | $138,000 or more but less than $153,000 | A reduced amount | |
$144,000 or more | $153,000 or more | Zero | |
Married filing jointly or qualifying widow(er) | Less than $204,000 | Less than $218,000 | Up to the limit |
$204,000 or more but less than $214,000 | $218,000 or more but less than $228,000 | A reduced amount | |
$214,000 or more | $228,000 or more | Zero | |
Married filing separately and you lived with your spouse at any time during the year | Less than $10,000 | Less than $10,000 | A reduced amount |
$10,000 or more | $10,000 or more | Zero |
Unlike with Roth IRAs, contributions in traditional IRAs grow tax-deferred in your account until you’re ready to take distributions. A traditional IRA can be a great choice for investors seeking to reduce their tax obligation, as contributions can be partially or fully deducted from an investor’s income, depending on filing status and income.
Below are the changes for the 2023 tax year.
Deduction Limits: Employer Does Offer a Retirement Plan |
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Filing Status | 2022 Modified Adjusted Gross Income (MAGI) | 2023 Modified Adjusted Gross Income (MAGI) | Deduction |
Single or head of household | $68,000 or less | $73,000 or less | Full deduction |
More than $68,000 but less than $78,000 | More than $73,000 but less than $83,000 | Partial deduction | |
$78,000 or more | $83,000 or more | No deduction | |
Married filing jointly or qualifying widow(er) | $109,000 or less | $116,000 or less | Full deduction |
More than $109,000 but less than $129,000 | More than $116,000 but less than $136,000 | Partial deduction | |
$129,000 or more | $136,000 or more | No deduction | |
Married filing separately | Less than $10,000 | Less than $10,000 | Partial deduction |
$10,000 or more | $10,000 or more | No deduction |
Deduction Limits: Employer Does Not Offer a Retirement Plan |
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Filing Status | 2022 Modified Adjusted Gross Income (MAGI) | 2023 Modified Adjusted Gross Income (MAGI) | Deduction |
Single, head of household, or qualifying widow(er) | Any amount | Any amount | Full deduction |
Married filing jointly or separately with a spouse who is not covered by a plan at work | Any amount | Any amount | Full deduction |
Married filing jointly with a spouse who is covered by a plan at work | $204,000 or less | $218,000 or less | Full deduction |
More than $204,000 but less than $214,000 | More than $218,000 but less than $228,000 | Partial deduction | |
$214,000 or more | $228,000 or more | No deduction | |
Married filing separately with a spouse who is covered by a plan at work | Less than $10,000 | Less than $10,000 | Partial deduction |
$10,000 or more | $10,000 or more | No deduction |
With soaring inflation and rising interest rates, the idea of investing for the future may seem counterintuitive for many Americans. While it can be tempting to hold onto every penny with a death grip, it’s important to consider just how much you’re losing to inflation when your money is sitting in a low-yield savings account. And with some investors predicting a flat stock market for the next decade, now could be a good time to consider ways to better diversify your investments.
Why is portfolio diversification important? Especially during times of stock market volatility, diversification helps spread risk to prevent the takedown of your entire portfolio when one or two asset classes decline.
Many alternative investments, which were once reserved for ultra-wealthy and institutional investors, are now available to the general public and have the potential for gains rarely seen in public markets. Take, for example, farmland investments, which saw 16% average gains during the Great Recession, while the S&P 500 shed 30%.
Self-directed IRAs enable everyday Americans to invest in a variety of alternative assets like real estate, startups, fine art, crypto, and more.
Interested in adding alternative assets to your retirement portfolio? Open an Alto IRA or CryptoIRA today. You can even roll over funds from an old 401(k), IRA, or other retirement account-and it won’t count toward your 2023 IRA contribution limit.
Investing, especially in crypto, involves risks, including risk of loss. Do not invest without doing your research. Alto is an administrator and custodian of IRAs. Alto is not an investment advisor, broker-dealer or exchange.
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