On October 18, 2012, the IRS announced cost-of-living adjustments for 2013 retirement plan contributions. Individuals will be able to contribute more to retirement plans in 2013. Highlights of the IRS announcement include:
- Increasing the salary deferral limit for 401(k) and 403(b) plans from $17,000 to $17,500.
- Leaving unchanged the additional catch-up contribution for employees age 50 and older at $5,500.
- Increasing the limit on total contributions to defined contribution plans from $50,000 to $51,000.
- Leaving unchanged the definition of highly compensated employee as employees making $115,000 per year.
- Increasing the amount of compensation that can be taken into consideration for retirement plan contributions from $250,000 to $255,000.
- Increasing the contribution limit to individual retirement accounts (IRAs) from $5,000 to $5,500, but leaving unchanged the IRA catch-up contribution for those age 50 and older at $1,000.
The Social Security Administration earlier announced that the Social Security Wage Base for 2013 will increase to $113,700.