The Internal Revenue Service (IRS) announced that the amount individuals can contribute to some deferred compensation plans, such as 401(k) plans, has increased to $22,500 in 2023. This figure is up from $20,500 for 2022.
The increase in the contribution limit applies to employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. This includes the CalPERS 457 Plan.
The limit on annual contributions to an IRA increased to $6,500, up from $6,000. The IRA catch‑up contribution limit for individuals aged 50 and over is not subject to an annual cost‑of‑living adjustment and remains $1,000.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $7,500, up from $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000, starting in 2023. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased to $3,500, up from $3,000.
To learn more, including tax implications and deductions visit the IRS website.
Your Deferred Compensation Options
CalPERS deferred compensation plans include the 457 Plan and Supplemental Contributions Plan. Depending on your employer, you may be able to enroll in other supplemental savings products such as 403bCompare, ScholarShare College Savings Plan, and those offered through Savings Plus.
Each plan may be subject to different contribution limits.
More About the CalPERS 457 Plan
The CalPERS 457 Plan is a voluntary savings program that allows employees to defer any amount, subject to annual limits, from their paycheck on a pretax basis. In addition, employee contributions and their earnings, if any, can benefit from the power of tax-deferred compounding. This means you don’t pay income taxes on your contributions or earnings until you start taking withdrawals, which is usually in retirement.
The plan is for employees of participating public agencies and schools. All employees whose employers have adopted the CalPERS 457 Plan are eligible to join the plan, and there are currently no minimum service requirements to fulfill. View CalPERS 457 Plan Participating Agencies.