How ’13 Pension Limits Affect Accounts

The IRS recently announced the 2013 Pension Plan Limitations. If saving more for retirement is one of your New Year’s resolutions, you’ll want to pay close attention to the new limits and rules regarding your retirement accounts.

  • If you are under age 50, you can contribute up to $17,500 to the 401(k), 403(b), 457 or Roth versions of these. If you are age 50 or over, you may contribute an additional $5,500 for a total of $23,000.
  • The contribution limit for IRA/Roth IRAs increased from $5,000 to $5,500 this year. If you are age 50 or over, you can contribute an additional $1,000 for a total of $6,500.

Additionally, there are some new income restrictions when contributing to IRAs or Roth IRAs. Specifically:

  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012.
  • For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income it between $178,000 and $188,000, up from $173,000 to $183,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012.
  • For singles and heads of household, the income phase-out range is $112,000 to $127,000 up from $110,000 to $125,000.
  • For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $11,500 to $12,000. The catch-up contribution for individuals age 50 or over remains at $2,500.

With the potential for reductions in future Social Security benefits and fewer employers offering traditional pension plans, saving for retirement is more critical than ever. It’s important to be aware of these opportunities to increase retirement savings.

For a complete breakdown of 2013′s pension plan limits, visit http://www.irs.gov/uac/2013-Pension-Plan-Limitations

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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