By: Mathew Sorensen, Partner KKOS Lawyers
Good news. The IRS has announced increases into the amount of money individuals may contribute into their retirement plans in 2013. The IRS increased the amounts that may be contributed to Traditional and Roth IRAs. The IRS also increased the total amount that may be contributed as employee contributions into 401(k) plans. Here’s how the increased annual limits broke down.
Traditional and Roth IRAs- Increased from $5,000 to $5,500 a year. Those over 50 can still make an additional catch-up contribution of $1,000. Also, the income qualification limit for Roth IRA contributions increased from $183,000 to $188,000 for married couples and from $125,000 to $127,000 for those filing single.
401(k) Plans- The annual employee contribution amount that may be contributed into a 401(k) increased from $17,000 to $17,500. The catch up contribution from employee plans is still $5,500 per year for those who are 50 or older.
SIMPLE IRA- The amount that may be contributed to SIMPLE IRAs annually is increased from $11,500 to $12,000. Catch-up contributions for those over 50 stays at $2,500.
SEP IRA- The total amount that may be contributed annually increased from 25% of compensation or $50,000 to 25% of compensation or $51,000, whichever is less.
With increased tax rates on the horizon the tax benefits of making retirement plan contributions are only that more valuable. There are also tax credits for employers adopting new plans as well as savers credits for low income workers contributing to retirement plans. Please contact us at the law firm for assistance in determining which retirement plan is right for you.