IRS Announces 2013 Official Indexed Figures for Retirement Plans and Other Employee Benefit Plans
The Internal Revenue Service (IRS) issued Information Release 2012-77 on October 18, 2012, providing the 2013 official indexed figures for retirement plans and other employee benefit plans.
Annual dollar limit for pretax contributions to Section 401(k), 403(b), and 457 plans: $17,500 (The 2012 limit was $17,000)
Annual dollar limit on catch-up contributions for age 50 and over remains unchanged: $5,500. An individual age 50 or over may contribute a total of $23,000 annually.
Section 414(q) pay threshold for highly compensated employees remains unchanged from 2012: $115,000
Section 415 limit for defined benefit plans: $205,000 (The 2012 limit was $200,000)
Section 415 limit for defined contribution plans: $51,000 (The 2012 limit was $50,000) maximum employee and employer contribution)
Section 401(a)(17) recognizable pay limit: $255,000 (The 2012 limit was $250,000). Pay above this amount cannot be considered in a qualified pension or 401(k) plan
Social Security
Wage Base: The 2013 Social Security wage base is $113,700. (The 2012 amount was $110,100.) The maximum tax payable is $7,049.40.
FICA/Medicare Tax Rate: The FICA tax rate remains at 7.65%: 6.2% for Social Security and 1.45% for Medicare combined.*
*The Temporary Payroll Tax Cut Continuation Act of 2011 reduced the Social Security payroll tax rate by 2% on the portion of the tax paid by the worker through the end of February 2012. The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012. Under current law, this temporary reduction expires at the end of December 2012.
Beginning in 2013, the Patient and Protection Affordable Care Act (Obamacare) increases the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) for higher-income individuals. The payroll tax increase applies to wages over $200,000 for single tax filers and $250,000 for couples filing jointly. ($125,000 for a married individual filing separately.) The 1.45% Medicare tax applies to all earnings.
Maximum Monthly Benefit: For someone retiring at full retirement age in 2013, the maximum benefit is $2,533. (The 2012 amount was $2,513.) This equals $30,396 per year or $45,594 for a married couple.
Annual Earnings Test Limit: For individuals under full retirement age, the annual earnings test limit is $15,120. (The 2012 amount was $14,640.) For individuals attaining full retirement age in 2013, the annual earnings test limit for the months prior to attaining full retirement age is $40,080. (The 2012 amount was $38,880.) There is no annual earnings test for individuals who have attained full retirement age.
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