Caps raised for voluntary retirement plans

The IRS has increased some, but not all, limits on employee contributions to voluntary retirement plans for calendar year 2023. The standard annual limit will go up $2,000, to $22,500. The annual limit for an optional "catch-up" contribution for employees who are at least 50 years old on Dec. 31, 2022, goes up $1,000, to $7,500.

These changes are unrelated to the ISU mandatory retirement plan or contributions to IPERS. Voluntary retirement savings plans are for additional employee contributions, and the university doesn't provide a match to these plans. Iowa State offers two options for voluntary retirement savings: 403(b) and 457(b) plans.

For employees who have selected "maximum amount" for their contributions, the system will adjust to the new limit amounts; employees don't need to make any changes. For those who selected "maximum amount" and meet the age requirement, the maximum amount also will include the age 50+ catch-up limit, effective Jan. 1.

Changes to voluntary retirement accounts can be made any time in the Retirement@Work website, since last spring one of the apps available on the Okta sign-on page. A tutorial explains how to use the site.

403(b) and 457(b) voluntary retirement plans: Contribution caps

The limit on total annual additions for the 403(b) plan, which includes the university's contribution to the employee's mandatory 403(b) retirement account and the employee's mandatory and voluntary contributions, will go up $5,000 in 2023, to $66,000.

Lastly, employees who have worked at Iowa State at least 15 years might be eligible to contribute an additional $3,000/year to a 403(b) plan -- lifetime maximum of $15,000 -- in another catch-up option. This annual cap isn't changing for 2023. The 457(b) plan doesn't feature this option.

Questions about the changes may be directed to the staff in the fringe benefits, accounting and compliance office.

Related story:

• New website is central spot for tracking retirement funds, April 14, 2022