What’s new for IRAs in 2023

Increased contribution limits give more room to build your financial future
January 20, 2023

Individual Retirement Accounts (IRAs) are powerful tools for creating wealth, and the IRS announced changes in 2023 that can help you build your financial future.

For freelancers and the self-employed, there are three options outlined below: SEP, Roth, and traditional IRAs.

Catch makes it simple and automatic to contribute to your retirement without having to think about it.

Didn’t max out your contributions for 2022? You still have time! April 18, 2023, tax day, is the deadline for contributing to your 2022 IRAs. 


The contribution limits for Simplified Employee Pension (SEP) IRAs have increased. The limit is based on 25% of your income or a total dollar cap of $66,000, whichever is less. That cap is up from $61,000 in 2022.

Reminder: A SEP IRA is a flexible retirement plan that allows you to contribute more when business is strong and to cut back as needed. It’s also referred to as the “Self-employed IRA.” You can contribute much more to a SEP IRA than you’re allowed to contribute to a Roth or a traditional IRA.

Like a traditional IRA, the money you contribute to a SEP IRA on the front end is tax deductible, and the money you take out on the back end as a distribution is taxed as income. 

If you contribute to a SEP IRA, you can also contribute to a traditional or Roth IRA. Saving in more than one retirement account, especially if you’re able to maximize your contributions in each, can help you save even more for retirement.

For more on the different types of IRAs, check out the retirement guide.

Roth IRAs

For 2023, the contribution limit has increased from $6,000 in 2022 to $6,500 for individuals under 50, and from $7,000 to $7,500 for those 50 and older.

Reminder: Unlike a SEP or traditional IRA, a Roth IRA lets you contribute “post-tax dollars,” so you pay taxes on the front end when you contribute it, but not on the back end when you take it out. 

What that means is a Roth IRA allows you to contribute money that grows tax-free, so the funds you contribute plus interest and plus capital gains won’t be taxed when you take it out later in life. 

Roth IRAs can be a very powerful tool for growing money over long periods of time, especially if you start contributing to a Roth IRA when you’re young.

Traditional IRAs

The contribution limit has increased for traditional IRAs by the same amounts noted above, up $500 to $6,500 for those under 50 and to $7,500 for those 50 and older.

Reminder: a traditional IRA allows you to put money into retirement investments “pre-tax,” meaning the amount of income that you contribute to it in a given year is deducted from that year’s taxable income (same as for a SEP IRA). You pay taxes on that money when you begin taking withdrawals, ideally later in life once you’ve retired.

Note that the limits for traditional and Roth IRA contributions are combined. That means that you can contribute to both, but you can’t exceed the total combined contribution limit of $6,500 (if you’re under 50) or $7,500 (if you’re 50+). 

For example, if you’re 38 years old, you could maximize your contributions by adding $5,000 to a Roth IRA and $1,500 to a traditional IRA (to reach the total combined contribution limit of $6,500 for someone under 50). 

Whether you’re just starting to plan your financial future or well on your way, it’s never too late to grow your nest egg. 

Catch can make it easy to contribute to your retirement every time you get paid without having to think about it. Set aside a percentage of your income and let Catch help you invest in your future.