The IRS and the Social Security Administration have announced the cost-of-living adjustments for various benefit plan limits for 2013. Limits affecting retirement plans are shown directly below and the limits for health and certain other fringe benefit plans are shown on the following page.
Retirement Plan Limits
The IRS updated the retirement plan limits effective for the plan year that begins on or after January 1, 2013. The 2013 limits, as well as the 2012 limits, are as follows:
2012 |
2013 |
|
Maximum Elective Deferrals to §401(k), §403(b), and §457(b) Plans |
$17,000 |
$17,500 |
Maximum Catch-up Elective Deferrals to Plans other than SIMPLE Plans (age 50 by the end of the year) |
$5,500 |
$5,500 |
Section 415 Limits |
|
|
Annual Compensation Limit under §§401(a)(17), 404(l) and 408(k) |
$250,000 |
$255,000 |
§414(q) Highly Compensated Employee definition |
$115,000 |
$115,000 |
§416(i) Top-Heavy Compensation – Used to determine officers as key employees |
$165,000 |
$165,000 |
§409(o) Maximum ESOP Account Balance Subject to 5-Year Distribution Period |
$1,015,000 |
$1,035,000 |
ESOP Amount Used to Determine Extensions of the 5-Year Distribution Period |
$200,000 |
$205,000 |
SIMPLE Plans |
|
|
§408A Maximum Roth IRA Contribution (AGI Limit) |
|
|
Social Security Tax and Wage Base
For calendar year 2013, the Social Security taxable wage base increases to $113,700 (up from $110,100 in 2012). In addition, the regular employee portion of the Social Security tax of 6.2% applies starting in 2013. The temporary reduced level of 4.2% expired at the end of 2012. The employer portion of the Social Security tax remains unchanged at 6.2%.
Medicare Tax
The regular Medicare tax rate of 1.45% remains unchanged and applies to all income without a limitation for both the employee and employer portion. However, the Affordable Care Act added an additional Medicare tax of 0.9% starting in 2013. The additional Medicare tax applies to wages, other compensation, and self-employment income over certain dollar thresholds ($200,000 for single and $250,000 for married filing jointly). The additional Medicare tax only applies to the employee, and not the employer. But, the statute requires an employer to withhold the additional Medicare tax on wages or compensation it pays to an employee in excess of $200,000 in a calendar year. See the appended link for withholding and additional information: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax
Health and Fringe Benefit Plan Limits
The Service has also released health and fringe benefit plan adjustments effective January 1, 2013. The 2013 limits, as well as the 2012 limits, are as follows:
* The American Taxpayer Relief Act of 2012 (HR 8) re-instituted the transit parity limits for 2013 and retroactively for 2012.
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2012 |
2013 |
|
Health Savings Accounts – HDHP Limits
(§223(c)(2)(A)) |
|
|
Health Savings Accounts – Maximum Contribution Limits
(§223(b)) |
|
|
Medical Savings Accounts – Health Plan Limits
(§220(c)(2)(A)) |
|
|
Medical Savings Accounts – Maximum Contribution Limits
(§220(b)(2)) |
|
|
Transportation Fringe Benefits – Monthly Limits
(§132(f)(2)) |
|
|
Health FSA Contribution Limit (§125(i)) |
No limit |
$2,500 |
Employer Adoption Assistance Exclusion (§137) |
|
|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.