What is the maximum contribution limit for a 401(k) plan in 2023?

The maximum contribution limit for a 401(k) plan in 2023 is indeed $22,500. This limit is determined by the IRS and typically adjusts annually based on inflation.

In 2023, the increase from previous years reflects the IRS's effort to help individuals save more for retirement in the face of rising living costs. The contribution limit applies to employees under the age of 50. For those aged 50 and over, there is often a catch-up contribution provision that allows for additional contributions beyond the standard limit, but the basic contribution limit for those under 50 remains at $22,500.

Understanding these limits is crucial for financial planning, as maximizing contributions to a 401(k) can significantly impact retirement savings and investment growth over time.