As part of your planning for next year, you should review the contributions needed to fund your retirement accounts in 2023. Recent cost of living calculations means much higher contribution limits for next year. Additionally, the higher income phaseouts for eligibility will make many more taxpayers eligible for fully deductible contributions. So plan now to take full advantage of this tax benefit. Here are the annual contribution limits for some of the more popular programs:

How to use the retirement contributions

• Identify the type(s) of retirement savings plans that you currently use
• Note the annual savings limits of the plan to adjust your savings to take full advantage of the annual contributions (remember, a missed year is a missed opportunity that does not come back)
• If you are 50 years or older, add the catch-up amount to your potential savings total
• Take note of the income limits within each plan type
  • For traditional IRAs, if your income is below the noted threshold, your taxable income is reduced by your contributions (the deductibility of your contributions is also limited if your spouse has access to a plan)
  • In the case of Roth IRAs, the income limits restrict who can participate in the plan

Other ideas to save for your future

If you have not already done so, also consider:

• Setting up new accounts for a spouse or dependent(s)
• Using this time as a chance to review the status of your retirement plan, including the beneficiaries
• Reviewing contributions to other tax-advantaged plans like Flexible Spending Accounts (health care and dependent care) and prepaid medical savings plans such as Health Savings Accounts

Understanding your current situation and having a plan will help maximize your future savings. Contact our RRBB accountants and advisors today for more information. We can help you determine the best next step for you.