NOVEMBER 2022 Newsletter: New Retirement Contribution Limits for 2023

The Internal Revenue Service has released new limits for the coming year. After months of high inflation and financial uncertainty, some of these cost-of-living-based adjustments have reached near-record levels.

Individual Retirement Accounts (IRAs)
IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500.

Roth IRAs
The income phase-out range for Roth IRA contributions increases to $138,000-$153,000 for single filers and heads of household, a $9,000 increase. For married couples filing jointly, phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.

Workplace Retirement Accounts
Those with 401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, the limit rising to $22,500. Those aged 50 and older will now have the ability to contribute an extra $7,500, bringing their total limit to $30,000.

SIMPLE Accounts
A $1,500 increase in limits for 2023 gives individuals contributing to this incentive match plan a $15,500 stop light.

Other Changes
In addition to changes in contributions limits, the IRS also announced several other changes for 2023, including an increase to the annual exclusion for gifts to $17,000 per person and an increase to the estate tax exclusion threshold. Please click here for more detailed information on tax inflation adjustments for tax year 2023. 

Keep in mind that we provide updates for informational purposes only, so please consult with your tax professional before making any changes in anticipation of the new 2023 levels. You can also contact our offices, and we can provide you with information about the pending changes.

• IMPORTANT NOTE FOR NON-RETIREMENT ACCOUNTS:
  
  We have learned that the Delaware Ivy family of mutual funds is intending to distribute large, taxable, capital gains for several of their funds in December. Delaware Ivy's action may result in a "double-whammy" of sorts -- given the prospective tax implications and the declines we have experienced in the markets this year.
  
  We have been proactive in our attempt to minimize this tax impact for our "advisory" clients (those who are paying a quarterly investment management fee and have also granted us rights to place trades on their behalf at our discretion).
  
  Where we do not have discretionary rights for our non-advisory "brokerage" clients (those who pay commissions when trades are placed instead of the quarterly investment management fee), we encourage you to contact us to discuss any potential impact to you and to obtain your instructions should you wish to take any action.
  
  Please note that this is a time sensitive issue as any instructions must be implemented before December should you wish to attempt to mitigate this potential tax burden.
  
  ^{[This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.]}
  
  
• The Social Security Administration has announced its cost-of-living adjustment (COLA) for 2023, with benefits for approximately 70 million Americans increasing 8.7 percent. Please visit https://www.ssa.gov/cola/  for more information.
  
• Refund checks began on November 1st for millions of Massachusetts eligible taxpayers receiving approximately 13% of their Massachusetts personal income tax liability for tax year 2021. For more details, including eligibility requirements and a refund estimator, please visit Mass.gov's website here.
  
  
• Our Preparing for Year-End & the 2022/2023 Tax Season guide can help you get ready for tax season. Review this resource for important information and deadlines you need to know.
  
  

Using The IRS2Go App

Did you know that the IRS has an app that makes it easy to check some things off your tax to-do list? Using the app, you can:

• Check your refund status. Your refund status is available within 24 hours after the IRS receives your e-filed return (or four weeks after receiving a paper return).
• Access IRS Free File. Free File is a tax prep software for taxpayers whose 2021 total adjusted gross income was $73,000 or less.
• Find payment options, including IRS Direct Pay which allows you to pay tax bills directly from your bank account.
• Get tax help.
• Stay up to date with updates from the IRS.

^{* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.}

^{Tip adapted from IRS.gov}

A sudden noise startles a gopher, an owl, and a skunk at the edge of a forest. The owl flies off and the gopher retreats into his burrow, but the skunk runs for the trees. How far can that skunk run into the forest? 

Last month's riddle: Gerald Ford was our 38th President, but he was actually the 37th man to take the job. Why was that? Riddle answer: Grover Cleveland was both the 22nd and 24th President of the U.S.; he served two non-consecutive terms.