LINCOLN, R.I. (WPRI) — The Internal Revenue Service (IRS) is increasing the amount people can contribute to their 401(k)s and Individual Retirement Arrangements (IRAs) to help keep up with the cost of inflation in 2023.

Contribution limits for  401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will increase to $22,500, according to the IRS.

That is $2,000 more than the contribution limits in 2022, which was $20,500.

Donna Sowa Allard of Sowa Financial Group tells 12 News this could have a major impact for savers.

“It is really significant, especially if you are behind on your savings,” Allard said.

Allard said if a person is over 50 years old, they can put in catch-up contributions of up to $30,000.

For those who contribute to an IRA, that limit is going up as well.

“The IRA limit is going up to $6,500 if you are under 50 … it’s an extra $1,000 if you are over 50,” Allard explained.

Allard recommends those who haven’t started saving utilize the employer’s match contribution.