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.

Fraser Stryker is a leader in employee benefits and tax law. Attorneys in the Firm’s Employee Benefits and Taxation Practice Groups advise businesses, governments, and nonprofit/tax-exempt organizations on a wide variety of tax and employee benefits matters, transactions, and litigation. Fraser Stryker helps employers implement and maintain innovative and cost-effective employee benefit plans that attract and retain top talent. For more information, please contact Nicole R. Konen or Emily Wischnowski.