5 Investment Changes That Can Boost Your Funds in 2023

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1. Higher contribution limits in retirement accounts

If you’re interested in boosting your retirement savings, there’s good news for 2023: Higher contribution limits For your 401(k) and individual retirement account.

In 2023, the employee deferral limit increases from $20,500 to $22,500, and the catch-up deposit limit for savers age 50 and older increases from $6,500 to $7,500. These increases also apply to 403(b) plans, most 457 plans and thrift savings plans.

“It’s a big change for a lot of people,” says certified financial planner Brandon Oubre, founder of Trust Tree Financial in Huntersville, North Carolina.

But without a reminder from an advisor or your 401(k) plan provider, these increases “may go undetected,” he said.

Contribution limits for IRAs have also increased, allowing you to save up to $6,500 in 2023, up from $6,000 in 2022. The catch-up deposit will be $1,000 in 2023. Indexed for inflation starting in 2024.

2. Tax savings with inflation-adjusted brackets

Scott Bishop, CFP and managing director of wealth solutions at Houston-based Avidian Wealth Solutions, said the biggest personal finance changes for 2023 are tied to inflation.

For example, the IRS announced “some relief” in October Higher federal income tax brackets By 2023, he said, that means you can earn more before hitting the next tier.

Each bracket shows how much you owe in federal income taxes for each portion of your “taxable income,” calculated by subtracting the higher of standard or itemized deductions from your adjusted gross income.

The standard deduction increases in 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers can claim $13,850 in 2023, up from $12,950.

3. Higher limit on 0% long term capital gains

If you plan to sell investments from a taxable portfolio in 2023, you’re less likely to trigger the bill for long-term capital gains taxes, experts say.

Adjusted for inflation, the I.R.S Raised income limits The 0%, 15% and 20% long-term capital gains brackets for 2023 apply to gainful assets owned for more than one year.

“It’s going to be very significant,” Tommy Lucas, a CFP and enrolled agent at Moisant Fitzgerald Tamayo in Orlando, Florida, told CNBC recently.

With higher standard deductions and income limits for long-term capital gains in 2023, you’re more likely to fall into the 0% bracket, Lucas said.

In 2023, you may qualify for the 0% rate with taxable income of $44,625 or less for single filers and $89,250 or less for married couples filing jointly.

4. Higher income limit for Roth IRA contributions

2023 inflation-adjusted more investors may qualify for Roth IRA contributions, experts say.

“We talk a lot about Roth conversions,” says Lawrence Pohn, CFP and CPA at Pohn & Associates in Redwood City, California, referring to one strategy. Converting Pretax IRA Funds to a Roth IRA For future tax free growth.

“But how Roth [IRA] Contributions?” he said at the Financial Planning Association Annual Conference In December, it points to higher income thresholds for 2023.

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More Americans could qualify in 2023, as the adjusted gross income threshold will increase from $138,000 to $153,000 for single filers and $218,000 to $228,000 for married couples filing jointly.

Some investors may resort to “complicated” moves, such as backdoor Roth conversions After-tax 401(k) contributions For a Roth IRA, Pon urges investors to double-check Roth IRA contribution eligibility first.

5. More time for minimum deliveries required

On Dec. 23, Congress A A $1.7 trillion omnibus appropriations billIncluding Dozens of retirement plans Known as “Safe 2.0”.

One of the rules for 2023 is change Minimum delivery requiredor RMDs must be taken annually from certain retirement accounts.

Currently, RMDs start when you turn 72, the deadline for your first withdrawal is April 1 of the following year, and the due date for future years is December 31. however, Safer 2.0 changes the starting age 73 in 2023 and 75 in 2033.

“Those already taking RMDs won’t be affected, even if you’re currently 72,” says Nicholas Bunio, CFP with Retirement Wealth Advisors in Berwyn, Pennsylvania.

But if you’re young and don’t need RMDs like potential Roth conversions, the change may offer some “better planning opportunities,” he said.


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