|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.