Major IRS changes in 2023 that may affect a person's retirement plans

To have a good life post retirement, people look for great ways to save money and avoid paying unnecessary tax.

It's often said that one should live every day in the best way possible as nobody knows what the future holds. But people have different perspectives, circumstances, requirements and style of living. Some live their best today and try to enjoy their hobbies and interests. Others believe in saving for a great life after retirement when they can enjoy getaways, hobbies etc. to their heart's content. Having said that, retirement is one of the most inevitable phase of one's life.

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While there is no fixed age to retire as for some, it can be a choice. But in the professional world, not all are as lucky where retirements mandatorily happen anytime beyond the age of 60. To have a good life post one retirement, people look for great ways to save money and avoid paying unnecessary tax.

Financebuzz.com have enlisted five major IRS changes in 2023 which may affect a person's retirement plans. Here are the IRS changes.

Maximum contribution to retirement plans

Some of the popular retirement plans offered are 401(k), 403(b), or 457 plan. The maximum amount that can be invested in these plans is $22,500 in 2023.

Phase-out ranges for traditional IRA contributions

For single savers with a workplace retirement plan, the phase-out ranges in 2023 are $73,000 to $83,000. For married couples who file jointly for the spouse, the phase-out ranges are $116,000 to $136,000.

Phase-out ranges for Roth IRA contribution

For Roth IRA contribution, the phase-out ranges are $138,000 to $153,000 for single savers and $218,000 to $228,000 for married couples filing jointly.

Contributions to SIMPLE IRA (Savings Incentive Match Plan for Employees)

This retirement plan is mainly for small businesses with 100 workers. A person can contribute $15,500 to their SIMPLE IRA in 2023. The amount was $14,000 in 2022.

Higher contributions to Health Savings Account(HSA)

HSA is not a retirement plan but some Americans try to save as much money in it as possible to use that later for meeting medical care costs after retirement.

In 2023, contribution limits to HSA plans are set to increase. A person can contribute a total of $3850 if they have self-only medical coverage. And if they have family coverage, they can contribute up to $7750.The amount are tax-free when withdrawn for medical expenses.