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2013 IRS and Social Security Cost-of-Living Adjustments Announced

Mark A. Smith
Barley Snyder - Lancaster Office

December 28, 2012

Previously published on December 20, 2012

The IRS and Social Security Administration have announced the 2013 cost-of-living adjustments. These new limits, including those mandated by the Economic Growth and Tax Relief Reconciliation Act of 2001, are summarized in the IRS News Release IR-2012-77.

Following are some of the more significant limitations affecting employee benefit plans:

  • The maximum amount that may be deferred under a 401(k) plan, not including Catch-up Deferrals (i.e. 402(g) limit) will increase from $17,000 to $17,500. For tax-sheltered annuities (Section 403(b) plans) and Section 457 plans, the maximum salary reduction contribution is also $17,500.

  • The IRC section 415 maximum annual benefit under a defined benefit plan will increase by $5,000 to $205,000.

  • The IRC section 415 maximum annual additions under a defined contribution plan will increase by $1,000 to $51,000, subject to the overall limitation of 100% of compensation.

  • The highly compensated employee threshold dollar limit will remain unchanged at $115,000.

  • The maximum amount of compensation that may be taken into account for benefit purposes under a qualified plan will increase from the current limit of $250,000 to $255,000.

  • The Catch-up Deferrals to 401(k), 403(b), and 457 plans also will remain unchanged at $5,500. Please note that the Catch-up Deferrals are only available for plan participants who turn 50 at any time during the plan year and who may no longer make deferrals because of plan or regulatory limitations.

  • The Social Security taxable wage base will increase by $3,600 to $113,700.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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