For 2023, the IRS has made the largest increase ever to 401(k) contribution limits.

Employees can now contribute $22,500 for 2023, up $2,000. And the ‘catch up’ contribution for those 50 and over increased $1,000 to $7,500. So those over 50 can now contribute $30,000 per year to a 401(k).

As well, self-employed people who have SEP plans or individual 401(k)s now can contribute $66,000 per year, up $5,000. So, with the catch up contribution of $7,500, those over 50 can contribute up to $73,500 a year. And IRA contribution limits have increased as well, from $6,000 to $6,500 a year.

These new increased limits offer a big savings opportunity as well as a current tax savings. For most people, contributions are tax-deductible when made, lowering current tax bills. And savings in these accounts roll over tax-deferred, meaning that they’re not taxed until withdrawn. So all the money keeps working, rather than some coming out for taxes, which are instead paid years later.