As is the case every year, the new year will bring a host of changes for retirement plan contributions in 2013. Virtually all retirement plans–employer sponsored and self-employment plans–will be affected.
With inflation being on the low end of the scale, the changes in contribution and income limits will be only moderate at best.
401(k), 403(b), 457 and Federal Employee Thrift Savings Plan
For all employer sponsored retirement plans, contribution limits have increased from $17,000 in 2012 to $17,500 for 2013.
The “catch up” provision for those age 50 and older remains at $5,500, unchanged from 2012. For 2013, taxpayers who are 50 or older can make a total contribution of $23,000.
IRAs (Individual Retirement Arrangements) Contribution Limits
IRAs have Increased as well, rising from $5,000 in 2012, to $5,500 for 2013.
And just as is the case with 401(k) plans and other employer plans, the catch up provision for IRAs is unchanged from 2012 to 2013, at $1,000. This makes the maximum IRA contribution for those 50 and older $6,500 for 2013.
Traditional IRA Income Limits
If you or your spouse are covered by another retirement plan, IRAs have income limits beyond which their tax deductibility is phased out until it disappears completely. These limits will also rise in 2013.
Here are the income range phase outs for 2013 for those who are covered by another retirement plan–they apply strictly to traditional IRAs:
- Single taxpayers, increasing from between $58,000 and $68,000 in 2012, to between $59,000 and $69,000 in 2013
- Married filing jointly, increasing from between $92,000 and $112,000 in 2012, to between $95,000 and $115,000 in 2013
- Married filing jointly in which the spouse making the IRA contribution is NOT covered by a pension, but the other spouse is, increasing from between $173,000 and $183,000 in 2012, to between $178,000 and $188,000 in 2013
Roth IRA Income Limits
Roth IRA deductibility is also subject to phase out based on income, but those limits are very different than what they are for traditional IRAs. The income level phase outs for 2013 are as follows:
- Single taxpayers, increasing from between $110,000 and $125,000 in 2012, to between $112,000 and $127,000 in 2013
- Married filing jointly, increasing from between $178,000 and $188,000 in 2012, to between $173,000 and $183,000 in 2013
- Married filing separately, remains unchanged, with the phase-out range staying at 0 to $10,000
SEP IRA, SIMPLE IRAs, and Solo 401(k) Plans
Contributions to self-employed retirement plans are also up slightly for 2013:
SIMPLE IRA. Increasing from $11,500 in 2012, to $12,000 in 2013. The catch up provision for taxpayers age 50 and older is unchanged at $2,500. The maximum SIMPLE contribution for a taxpayer 50 and older is $14,500 for 2013.
SEP IRA. Increasing from $50,000 in 2012, to $51,000 in 2013. SEP IRA contribution maximums are based on a contribution rate of up to 25% of gross income (after subtracting out the amount of the contribution itself). That income limit has been increased from $250,000 in 2012 to $255,000 in 2013.
Solo 401(k). Matching the employee 401(k) limits, contributions to a Solo 401(k) are increasing from $17,000 in 2012, to $17,500 in 2013. For taxpayers age 50 and older, the catch up provision remains unchanged for 2013 at $5,500. The contribution limit for a taxpayer who is 50 or older will then be $23,000 including the catch up provision.
Source: Internal Revenue Service 2013 Pension Plan Limitations October 8, 2012, and COLA Increases for Dollar Limitations on Benefits and Contributions.