2013 Qualified Retirement Plan Limits

The IRS has announced the new retirement plan limits for 2013. For your convenience we have summarized the most popular limits.

  • Elective deferrals

The limits on elective deferrals for employees who participate in 401(k)s, 403(b)s, certain 457s, and the federal government’s Thrift Savings Plan increase from $17,000 for 2012 to $17,500 for 2013.

  • Catch-up contributions

Eligible individuals age 50 and above may make catch-up contributions to IRAs, 401(k)s and other savings arrangements. The catch-up amount for 401(k)s, 457s, 403(b)s, and SEPs, also remains unchanged for 2013 at $5,500.

  • Defined contribution plans

The limitation for defined contribution plans will increase from $50,000 to $51,000 for 2013.

  • Defined benefit plans and ESOPs

The annual benefit limit under a  defined benefit plan (the maximum amount a plan may pay a participant each year) increases from $200,000 for 2012 to $205,000 for 2013. The amount for determining the maximum ESOP account subject to a five-year distribution period increases from $1,015,000 for 2012 to $1,035,000 for 2013. The dollar amount used to determine the lengthening period of the five-year distribution increases from $200,000 for 2012 to $205,000 for 2013.

  • Annual compensation limit

The annual compensation  (relating to the maximum compensation counted for an eligible employee in a qualifying plan), 404(l) (addressing the deductibility of employer contributions), 408(k)(3)(C) (nondiscrimination rules for simplified employee pensions (SEPs)) and 408(k)(6)(D)(ii) (the deferral percentage for SEPs) will rise from $250,000 in 2012 to $255,000 in 2013.

  • IRA limits

An individual making qualified retirement contributions to IRAs and similar plans will increase from $5,000 to $5,500.

The allowable IRA deduction will phase out when modified AGI is between $59,000 and $69,000 for single taxpayers who are active participants in an employer-sponsored retirement plan (up from $58,000 and $68,000 in 2012). For married couples filing a joint return, where the spouse making the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $95,000 to $115,000 (up from $92,000 to $112,000 for 2012).

  • SIMPLE Plans

The limitation regarding SIMPLEs increases to $12,000 for 2013, up from $11,500 for 2012.

If you have any questions regarding these limits or strategies to maximize your retirement plan benefits or contributions, please do not hesitate to contact us.

 

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