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.


This entry was posted in Blog, Tax Notes and tagged . Bookmark the permalink.

Comments are closed.