On October 21, 2022, the IRS released Notice 2022-55, which provided the cost-of-living adjustments (COLAs) for IRAs for 2023. As usual, the adjustments affected the modified adjusted gross income (MAGI) levels for determining both Roth IRA contribution and Traditional IRA deduction eligibility. However, in addition to MAGI levels increasing, the 2023 IRA contribution limit also increased.
For 2023 the IRA contribution limit will increase by $500 to $6,500 (up from $6,000 for 2022) for owners under age 50. IRA owners age 50 or older will be allowed to contribute as much as $7,500 ($6,500 + the $1,000 catch-up contribution amount) for 2023. Prior to this increase, the last time the IRA contribution limit was increased was 2019.
The 2023 Traditional IRA deductibility MAGI phase-out ranges are as follows: $73,000 to $83,000 (up from $68,000 to $78,000) for an active participant in an employer plan who is a single taxpayer or head of household; $116,000 to $136,000 (up from $109,000 to $129,000) for an active participant who is a married taxpayer and filing jointly; and $218,000 to $228,000 (up from $204,000 to $214,000) for an individual who is not an active participant but filing jointly with a spouse who is an active participant. For individuals who are married and filing separately, the phase-out range remains unchanged at $0 to $10,000.
Roth IRA contribution MAGI phase-out ranges for 2023 are as follows: $138,000 to $153,000 (up from $129,000 to $144,000) for single and head of household individuals and $218,000 to $228,000 (up from $204,000 to $214,000) for married filing jointly individuals. For individuals who are married and filing separately, the phase-out range remains unchanged at $0 to $10,000.