IRS Announces 2013 Pension Plan Limitations; Taxpayers May Contribute Up to $17,500 to Their 401(K)

20-Jul-2005

Recently, the IRS announced the cost-of-living adjustments for pension plans and other retirement-related items for tax year 2013. Most of the limitations increased for 2013 as the cost-of-living index has increased sufficiently. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $5,500.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) rises to $5,500, up from $5,000 in prior years.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012. For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $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.

For more information about how this may impact your tax situation, please us today.


your trusted advisor

EXPERIENCED
PROFESSIONAL
DEDICATED

Established in 1950, Darnall, Sikes & Frederick is a Louisiana based CPA firm with offices presently located in Lafayette, Eunice, Morgan City and Abbeville, Louisiana.

The partners in the firm, a progressive group in tune with today's needs, are dedicated to providing quality services that keep pace with a rapidly changing society and business environment. Today, the public and private sector and individuals must deal with changes resulting from constant technological advances and the globalization of the marketplace. The firm is committed to providing cutting-edge services that allow clients not only to adjust to the ongoing changes, but also to achieve financial benefit from them.