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IRS changes 401(k) contribution limit

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BISMARCK, ND (KFYR) — The Internal Revenue Service has made adjustments to tax brackets and 401(k) contributions that could affect you and your family.

Matthew Obrien says he doesn’t pay much attention to his 401(k). “I mean, I have one, but it’s not something I would say is my primary focus when investing,” said Obrien, of Bismarck. But if he changes his mind, next year he and everyone else can contribute more to their 401(k) account. “I think the government wants people to continue saving for retirement. By increasing the limits that people can put in place, they are only encouraging this. But also, since social security is increasingly in demand, we will have to rely on ourselves to save for our retirement.

The government won’t do it for us,” said David Wald, president of Securian Financial Advisors of North Dakota.

Starting in 2023, people will be able to contribute more than $22,500 to their 401(k) each year. That’s a $2,000 increase. In addition, tax brackets will also change to reflect inflationary pressures. “Well, I think the big thing people should know is where is the limit of their tax bracket? In other words, sit down with your accountant and talk to him about where you stand on that tax scale. ‘progressive taxation,” Wald said. The IRS also increased the standard deduction by about $1,400.

The IRS also increased the amount people can contribute to IRAs, raising the limit from $6,000 to $6,500. The adjustments will take effect for the 2023 tax year, with taxes to be filed in 2024.