Monthly Archives: October 2012

IRS Announces Retirement Plan Limits for 2013

Cost of Living Adjustments Effective for Plan Years Beginning 1/1/2013

On October 18, 2012, the Internal Revenue Service announced the cost-of-living adjustments that apply to retirement plans and other relevant limits for the tax year beginning on January 1, 2013. Akin to 2012, we once again see modest increases in some of the limits.

In a similar fashion, on October 16, the Social Security Administration announced that a 1.7 percent adjustment to benefits and limits will be made for 2013, and the Social Security Taxable Wage base will increase from $110,100 to $113,700.  The Temporary Payroll Tax Cut Continuation Act of 2011 reduced the Social Security payroll tax rate by 2% to 4.2% on the portion of the tax paid by the employee through the end of February 2012.  The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012.  Under current law, this temporary reduction expires at the end of December 2012.

We have highlighted the year-over-year changes in the below table for easy identification.*  For more information on how these limits may affect your financial and retirement planning needs, please contact our office.

 

2013

2012

2011

2010

2009

2008

2007

 
Elective deferral limit for 401(k), Roth 401(k), 403(b), & 457 Plans

$17,500

$17,000

$16,500

$16,500

$16,500

$15,500

$15,500

Catch-up contribution limit for 401(k), Roth 401(k), 403(b), & 457 Plans

$5,500

$5,500

$5,500

$5,500

$5,500

$5,000

$5,000

Elective deferral limit for SIMPLE IRA Plans

$12,000

$11,500

$11,500

$11,500

$11,500

$10,500

$10,500

Catch-up contribution limit for SIMPLE IRA Plans

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

Annual addition limit for defined contribution plans

$51,000

$50,000

$49,000

$49,000

$49,000

$46,000

$45,000

Annual addition limit to SEP IRA Plans

$51,000

$50,000

$49,000

$49,000

$49,000

$46,000

$45,000

Maximum plan compensation for retirement plan purposes

$255,000

$250,000

$245,000

$245,000

$245,000

$230,000

$225,000

Annual benefit limit for defined benefit plans

$205,000

$200,000

$195,000

$195,000

$195,000

$185,000

$180,000

Threshold amount for definition of a highly compensated employee**

$115,000

$115,000

$110,000

$110,000

$110,000

$105,000

$100,000

Threshold amount for definition of a key employee in top heavy plans

$165,000

$165,000

$160,000

$160,000

$160,000

$150,000

$145,000

SEP IRA compensation threshold for eligibility

$550

$550

$550

$550

$550

$500

$500

Social Security Taxable Wage Base

$113,700

$110,100

$106,800

$106,800

$106,800

$102,000

$97,500

IRA or Roth IRA contribution limit

$5,500

$5,000

$5,000

$5,000

$5,000

$5,000

$4,000

Catch-up contribution limit for IRA or Roth IRA

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

IRA Deduction phase-out limit for active plan participants starts at

Single

$59,000

$58,000

$56,000

$56,000

$55,000

$53,000

$52,000

Married Filing Jointly

$95,000

$92,000

$90,000

$89,000

$89,000

$85,000

$83,000

Married Filing Jointly and one spouse is covered by a plan

$178,000

$173,000

$169,000

$167,000

$166,000

$159,000

$156,000

Roth IRA contribution phase-out limit starts at

 

 

Single

$112,000

$110,000

$107,000

$105,000

$105,000

$101,000

$99,000

Married Filing Jointly

$178,000

$173,000

$169,000

$167,000

$166,000

$159,000

$156,000

 

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