Contribution Deadlines for Different Retirement Accounts
There are a variety of retirement accounts available, including traditional and Roth IRAs, solo 401(k)s, Roth solo 401(k)s, SEP-IRAs, SIMPLE IRAs, 403(b)s, 457(b)s, and defined benefit plans. Each of these accounts has specific contribution deadlines and rules, which are outlined in relevant IRS publications.
It’s essential for individuals and business owners — whether you’re a W-2 employee or you operate a sole proprietorship, single-member LLC, an S-corporation, or a C-corporation — to be aware of these deadlines and annual contribution limitations to fully benefit from these retirement savings opportunities.
For some accounts, like a traditional 401(k), the deadline for total contributions is the end of the calendar year. For other deposits, like traditional IRA or Roth contributions, or your profit-sharing contributions (if you’re a sole proprietor or own a small business entity with no employees) you may have until the tax filing deadline for the year.
Consult with your plan providers, tax advisor, or financial advisor to get specific information about your contribution deadlines so you make the most of your retirement savings.
Contribution Limits for Different Retirement Accounts
Understanding the contribution limits for various retirement accounts is essential for effective retirement planning. In this section, we’ll discuss the limits for Traditional and Roth IRAs, Solo 401(k) plans, SEP-IRAs, SIMPLE IRAs, 403(b) and 457(b) plans, and defined benefit plans.
We’ll also cover catch-up contribution limits for individuals 50 and over, who can contribute more to maximize their retirement savings.
Traditional and Roth IRA Contribution Limits
Traditional and Roth IRAs are two popular types of Individual Retirement Accounts. Their main difference is their tax treatment: traditional IRA contributions are pre-tax and therefore can be tax-deductible, while Roth IRA contributions are made with after-tax dollars and allow for tax-free qualified withdrawals in retirement.
For both traditional and Roth IRAs, the contribution limit in 2023 is $6,500. Individuals aged 50 and older can make catch-up contributions of an additional $1,000, raising their total limit to $7,500.
Because this type of retirement account is attached to individuals, not an employer, it is an option for anyone with earned income — including those who are self-employed.
Solo 401(k) Contribution Limits
A Solo 401(k) is a retirement plan specifically designed for self-employed individuals or small business owners who don’t have any full-time employees. Solo 401(k) plans allow elective employee deferrals as well as employer profit-sharing contributions.
In 2023, the total contribution limit for a solo 401(k) is $66,000, combining both the employee contribution and the profit-sharing contribution. For those aged 50 and older, there is a catch-up contribution limit of $7,500, increasing the total contribution limit to $73,500.
Your profit-sharing contribution is calculated based on your net earnings from self-employment after subtracting a portion of your self-employment tax. These accounts can be self-directed, providing more flexibility around investment options than you’d find in a typical employer-sponsored 401(k).
SEP-IRA Contribution Limits
A SEP (Simplified Employee Pension) IRA is a retirement plan that allows business owners to contribute to their own and to their employees’ retirement savings accounts. Contributions are made from the employer only.
In 2023, the contribution limit for a SEP-IRA is the lesser of 25% of the employee’s compensation or $66,000. SEP IRAs don’t offer catch-up contributions in the same way that other accounts do, primarily because they are funded only by the employer.
SIMPLE IRA Contribution Limits
A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a retirement plan for small businesses with 100 or fewer employees. Both employees and employers can contribute to a SIMPLE IRA.
In 2023, the contribution limit for a SIMPLE IRA is $15,500. Individuals aged 50 and older can make catch-up contributions of an additional $3,500, raising their total limit to save more aggressively in the tax years leading up to retirement.
403(b) and 457(b) Plan Contribution Limits
403(b) and 457(b) plans are retirement plans for employees of tax-exempt organizations, such as schools, hospitals, and government entities. Both plans allow for employee deferrals and, in some cases, employer contributions. These salary deferral contributions are generally made pre-tax, like those for a traditional 401(k).
In 2023, the contribution limits for both 403(b) and 457(b) plans are the same as that of a traditional 401(k): $22,500. They also offer the same $7,500 catch-up contribution to those 50 and over.
Defined Benefit Plan Contribution Limits
A defined benefit plan is a retirement plan that provides a predetermined, fixed benefit in retirement based on factors such as salary and years of service. The plan is funded by employer contributions, which are actuarially determined to provide the promised benefits.
In 2023, the maximum annual benefit that can be funded through a defined benefit plan is $265,000 or 100% of the employee’s average compensation for the highest three consecutive calendar years, whichever is lower.
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