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2013 Cost-of-Living Adjustments for Retirement and Other Benefit Plans




by:
Jessica R.R. Faith
Douglas J. Heffernan
Faegre Baker Daniels - Minneapolis Office

 
January 28, 2013

Previously published on January 18, 2013

Following the enactment of the American Taxpayer Relief Act of 2012, the IRS has announced the 2013 cost-of-living adjustments for transportation fringe benefit plans and adoption assistance.

Parking and Transportation

In 2013, the limit on the monthly amount that can be excluded from income for qualified parking expenses, transit passes and/or transportation in a commuter highway vehicle under a qualified transportation fringe benefit plan has increased to $245.

Adoption Assistance

The exclusion for employer-provided adoption assistance will increase to $12,970 per child in 2013. In 2013, the exclusion begins to phase out for taxpayers with adjusted gross income above $194,580 and is eliminated for taxpayers with adjusted gross income of $234,580 or more.

The IRS previously announced the 2013 cost-of-living adjustments that apply to retirement and other employee benefit plans.

Retirement Plan Limits

The following limits apply to retirement plans in 2013:

  • The limit on elective deferrals under 401(k) and 403(b) plans has increased to $17,500 in 2013.
  • The annual limit on deferred compensation under eligible 457(b) plans has increased to $17,500 in 2013.
  • The limit on extra catch-up contributions by participants age 50 or older remains at $5,500. The maximum amount of elective deferrals by such participants in 2013 is $23,000.
  • The Section 415 limit has increased to $51,000 for 401(k) and other defined contribution plans and to $205,000 for defined benefit plans.
  • The limit on the annual compensation that can be taken into account by qualified plans has increased to $255,000.
  • The dollar level for becoming a highly compensated employee remains at $115,000 of pay in 2013 for determinations in 2014.

In addition, the Social Security wage base has increased to $113,700 in 2013. This is the maximum amount of pay considered FICA wages and is also the maximum "integration level" for plans using "permitted disparity."

Health Savings Accounts

The maximum annual contribution to a health savings account (HSA) will increase in 2013. For single coverage, the limit is $3,250. For family coverage, the limit is $6,450. The additional "catch-up" HSA contribution that can be made by individuals age 55 or older is fixed by statute at $1,000 for 2013. The minimum deductible required to qualify as a high-deductible health plan (HDHP) in 2013 for purposes of the HSA rules has increased to $1,250 for single coverage and $2,500 for family coverage in 2013. The corresponding limits on HDHP out-of-pocket maximums will increase to $6,250 for single coverage and $12,500 for family coverage in 2013.



 

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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