SECURE Act 2.0 ~ Know Your 401(k) and IRA Contribution Limits for 2023

Beginning in 2025, the law will allow workers aged 60 through 63 to make a larger catch-up contribution to certain retirement plans. For qualified plans, such as a 401(k) and 403(b), the additional limit will be 150% of whatever the regular catch-up amount is for a given year or $10,000—whichever is greater. For SIMPLE plans, the additional limit will be 150% of whatever the regular catch-up amount is for a given year or $5,000—whichever is greater. In addition, starting in 2024, all catch-up contribution limits will be indexed to inflation, including IRA catch-up contributions.

Prior to SECURE Act 2.0, catch-up contributions were allowed on a pre-tax basis (tax-deferred accounts) or after-tax basis (Roth accounts). Beginning in 2024, individuals with compensation over $145,000 (indexed to inflation) will only be able to make catch-up contributions to Roth accounts. Effective in 2023, employers will also be allowed to match employee contributions to qualified retirement plans on a pre-tax or after-tax basis, where in the past they were only allowed to make pre-tax contributions. In addition, SEP and SIMPLE IRAs will be allowed to be designated for Roth contributions, when in the past this was not allowed.