In an unprecedented move, the Internal Revenue Service (IRS) boosted contribution limits for tax-deferred, and tax-advantaged retirement savings accounts like the 401K for 2023.
Beginning next year, taxpayers will be able to contribute up to $22,500 into a 401K account. That will also include other accounts like the 403(b) and most 457 plans or the Thrift Savings Plan, which is used by federal employees.
That's a $2,000, or 9.8%, boost from the current $20,500 federal contribution limit.
The IRS made the move, largely, due to inflation.
IRAs and after-tax Roth IRAs will have an increase, also, from $6,000 currently to $6,500, starting next year. That's an 8.3% boost.
As CNN reported, more changes are expected as lawmakers continue to work to pass legislation that relates to retirement savings and ways to combat inflation.
Read the full statement from the IRS on all of the changes that are coming, on their website.