Contribution Limits on Self-Directed IRAs are Going Up

Contribution Limits on Self-Directed IRAs are Going Up

Admit it. If you enjoy contributing as much as you can to retirement, there’s a possibility that you’ve brushed up against the upper limit of the contributions you can make and wished that you could sock away even more. Well, there’s good news. Fresh off inflation that is changing the way people think about groceries and investing, the IRS has recently announced that contribution limits for certain retirement accounts are going up in 2023.

But what are those changes, and what is it going to have to do with your experience as an investor? Here’s what you’ll need to know.

The Changes: What’s Happening in 2023

According to the CNBC article linked above, contribution limits on 401(k)s are going to go up by $2,000 in 2023, with an additional $7,500 available for people 50 and older. For those who are 50 and older, contribution limits may go up to $30,000. This allows investors who use a Self-Directed Solo 401(k) plan to potentially sock away more money for retirement as well. And because these contributions can be tax-deductible, this means that investors will have more options for putting money away for retirement than ever.

That’s not all, however. IRAs, such as Traditional and Roth IRAs, may have their contribution limits increase by $500 per year for the year 2023, which would put them at $6,500 for the year. The article also notes that income limits for Roth IRAs will be going up, which increases the potential pool for investors who can use Roth IRAs to save for retirement. This is highlight relevant for retirement investors, because so many of them would invest in Roth IRAs but for these income limits. According to CNBC, “The income phase-out range for Roth IRAs will be between $138,000 and $153,000 for single filers and heads of household (up from between $129,000 and $144,000).”

What Self-Directed IRA Investors Should Know

These contribution limits are, of course, only relevant for people who plan to put aside a lot of money for retirement. But as you go up in age and income, you’ll soon realize just how important these limits are. And for Roth IRAs, there is also the income limit. This means that you’ll have to be sure that you are making the proper amount of money to invest in a Roth IRA in the first place. The more you understand these contribution limits, the better you’ll be able to plan.

But that’s not the only reason you should be aware of these limits. If you’re investing in alternative assets like real estate, precious metals, and private companies, you may need to know these contribution limits so you can create a large account to handle the investments you want to make. It’s true that in some cases, you can use non-recourse loans with an IRA to handle a real estate purchase. But you’ll still need to know what the limits of your contributions are so that you can make valid investments within a retirement account.

Why You Need to Stay Informed

The investor that stays informed with all the latest developments in the world of retirement investing is going to have a leg up on planning. For example, if you’re reading this in 2022, it means that you have a “preview” of coming attractions. You know what you need to plan to put away next year—sometimes, month by month—to ensure that you’re meeting your goals.

Want to learn more about how to use a Self-Directed IRA? You can reach out to us here at American IRA by dialing 866-7500-IRA.

We even have the Contribution Limits for 2024! Check it out at: Changes in Self-Directed IRA Contribution Limits in 2024 | American IRA