FSA & 401(k) Contributions for 2023
November 18, 2022
Taxpayers that participate in employer-sponsored health Flexible Spending Accounts (FSAs) can contribute more in 2023. The annual contribution amount will rise to $3,050 (up from $2,850 in 2022). FSAs allow owners to pay for qualified medical costs with pre-tax dollars. That’s good news if you’re scrambling to keep up with rising costs. FSA owners use a debit card or pay out of pocket for expenses and then seek reimbursement. FSA funds must be used by year end unless an employer elects to allow a 2.5-month carryover (or grace period). For 2023, the amount that can be carried over to the following year will rise to $610 (up from $570 for 2022).
In 2023, individuals will be able to contribute up to $22,500 to their 401(k) plans, the IRS announced. The same is true for 403(b) plans and most 457 plans. This is up from $20,500 in 2022. The increase is part of the cost-of-living adjustments made annually. The catch-up contribution limit for employees age 50 and over who participate in these plans will also rise in 2023 to $7,500, bringing their total allowable contribution to $30,000 per year. For those who own IRA accounts, the limit on annual contributions will rise for 2023 to $6,500 (from $6,000). The IRA catch-up contribution for those age 50 and up remains at $1,000. Find out more by clicking here or contacting our team to discuss.
Meet the Expert
Chris Powers, CPA
Chris helps her clients confidently navigate tricky tax laws and complex regulatory challenges.