401k Contribution Limits for 2023 for Married Couples
For the 2023 tax year, married couples can contribute up to $19,500 to their 401k retirement accounts. This amount is up from the current 2021 limit of $19,500. The 401k contribution limit is subject to cost-of-living adjustments (COLA) which are made on an annual basis. This means that the contribution limit can increase each year, depending on the rate of inflation.
401k plans are one of the best retirement savings vehicles available to married couples. They offer tax-deferred growth, meaning that any investments you make in a 401k are not taxed until you withdraw them in retirement. They also have very high contribution limits, which means that married couples can put away a great deal of money for their retirement. This makes 401k plans a great choice for married couples who want to save for the future.
The contribution limit for a married couple is based on the combined income of both partners. The contribution limit is calculated by dividing the couple’s combined income by the contribution limit for a single person. For example, if a married couple earns $75,000 a year, their contribution limit would be $19,500 divided by $18,500, or $1,500. This means that each partner can contribute up to $1,500 of their income to their 401k for the 2023 tax year.
It is important to note that the contribution limit is an annual limit. This means that if a married couple contributes more than the maximum amount in any given tax year, the excess amount will be subject to taxes and penalties. It is also important to remember that the contribution limit does not include any employer match. If an employer does offer a match, the amount that is matched does not count towards the total contribution limit.
In addition to the contribution limit, married couples also need to be aware of other limitations. For example, if a married couple is over the age of 50, they may qualify for a “catch-up” contribution. This allows them to contribute an additional $6,500 to their 401k, for a total of $26,000. This can be a great way for couples to maximize their retirement savings.
It is also important to understand that the contribution limit is not the same as the total amount that a married couple can save in a 401k. While the contribution limit is the maximum amount that can be contributed in a given tax year, the total amount that can be saved in a 401k is much higher. This is because investments in a 401k can grow over time, which means that a married couple can potentially save more than the contribution limit.
Finally, married couples should keep in mind that the contribution limits for 401ks can change from year to year. This means that married couples should check annually to make sure that they are up to date on the current contribution limits. This will ensure that they are taking full advantage of their 401k and maximizing their retirement savings.
Conclusion
Married couples can contribute up to $19,500 to their 401k retirement accounts for the 2023 tax year. This amount is subject to cost-of-living adjustments and can change from year to year. It is important to keep up to date on the latest contribution limits and to consider any additional contributions that may be available, such as catch-up contributions for those over the age of 50. By planning ahead and taking advantage of the tax benefits of a 401k, married couples can maximize their retirement savings.