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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