Various benefit plans offer you the chance to set aside funds for things like healthcare expenses and retirement, while enjoying helpful tax benefits. But because the cost of living changes regularly, often due to rising inflation, the IRS and other government agencies recognize the importance of adjusting contribution limits to match economic needs. That’s good news for you, because it means you can adjust your savings strategies to keep pace with conditions now and in the future.
For 2023, new contribution limits have been announced as follows.
Health savings accounts. A health savings account (HSA) represents an opportunity for those enrolled in high-deductible healthcare plans to set aside funds for out of pocket healthcare expenses. Since these contributions are made on a pre-tax basis, you can essentially lower your taxable income for the year by the amount that you save for medical care. And you can even roll over unused funds into retirement. For 2023, the new HSA contribution limits are $3,850 for individuals and $7,750 for families.
Flexible spending accounts. Those with a flexible spending account can now contribute $3,050 to the account each year, before the money is subject to income taxes. You can use these funds to pay for uncovered medical expenses like prescriptions, copayments, deductibles, and more.
Retirement plans. And for those with an eye on the long future, don’t forget to adjust your retirement plan contributions. It’s always a good idea to max out contributions if you can, because no retiree ever said that their nest egg was too large! If you contribute to a 401k, 403b, most 457 plans, or a Thrift Savings Plan, you can now save $22,500 in your account next year. Those over age 50 can make an additional catch-up contribution of $7,500.
If you hold an Individual Retirement Account (IRA), you can contribute $7,500 to the account next year, plus an additional $1,000 if you’re over age 50.
For more information on your benefits, or to establish a benefit plan for your employees, give us a call and we’ll be happy to explain more about how these programs work.