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10-19-2012 IRS Announces Cost Of Living Adjustments for Retirement Plans for 2013

The Internal Revenue Service has announced cost of living adjustments affecting dollar limitations for retirement plans for 2013. In general, many limits will increase slightly from 2012. Highlights include:

  • The elective contribution limit for employees who participate in section 401(k), 403(b), or 457(b) plans increase from $17,000 to $17,500.
  • The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
  • The limitation for the maximum annual addition for defined contribution plans increases from $50,000 to $51,000.
  • The annual compensation limit that can be considered under a plan increases from $250,000 to $255,000.
  • The limitation used in the definition of highly compensated employee remains unchanged at $115,000.
  • The dollar limitation concerning the definition of a key employee remains unchanged at $165,000.
  • The limitation on the annual benefit under a defined benefit plan increases from $200,000 to $205,000.
  • The compensation amount regarding simplified employee pensions (SEPs) remains unchanged at $550.
  • The limitation regarding SIMPLE retirement accounts increases from $11,500 to $12,000.
  • The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2011; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750.
  • The dollar amount for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $92,000 to $95,000. The applicable dollar amount for all other taxpayers (other than married taxpayers filing separate returns) is increased to $59,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $173,000 to $178,000.

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