Now that we have clarity (at least for the time being) with regards to current year tax law and its implications on your specific tax situation, we thought it would be a good idea to remind every one of the 2013 §401k retirement plan limits. These plans are great vehicles for deferring income and postponing the paying of the tax.
- The salary deferral contribution limit is increased from $17,000 in 2012 to $17,500 in 2013
- The catch-up contribution limit for employees age 50 and older remains unchanged at $5,500 in 2013 ($17,500 + $5,500 = $23,000 salary deferral limit for employees age 50 and older in 2013)
- The maximum annual plan contribution limit (employee + employer contributions) is increased from $50,000 in 2012 to $51,000 in 2013
- The plan compensation limit is increased from $250,000 in 2012 to $255,000 in 2013
- The Highly Compensated Employee compensation limit remains unchanged at $115,000 in 2013
- The Key Employee compensation limit for company officers remains unchanged at $165,000 in 2013
- The Social Security Taxable Wage Base is increased from $110,100 in 2012 to $113,700 in 2013
- The maximum deductible employer contribution limit (as a percentage of aggregate eligible participant compensation) remains unchanged at 25% in 2013
If you have any questions regarding these limits and other deferral options, please do not hesitate to contact us.