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
- Defined Contribution Plan Annual Addition Maximum
- Defined Benefit Plan Dollar Maximum


$50,000
$200,000


$51,000 $205,000

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
Qualified Salary Reduction Limit under §408(p)
§§401(k)(11) and 408(p) Catch-up Contributions (age 50 by end of year)


$11,500
$2,500


$12,000 $2,500

§408A Maximum Roth IRA Contribution (AGI Limit)
Married Filing Joint Return or Qualifying Widower
All other Taxpayers (other than married filing separately)


$173,000
$110,000


$178,000 $112,000

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.

You can also follow us at http://www.healthandwelfarelaw.com and @KTS_Benefits on Twitter.

2012

2013

Health Savings Accounts – HDHP Limits (§223(c)(2)(A))
HDHP Minimum Annual Deductible – Self Only
HDHP Minimum Annual Deductible – Family
HDHP Out-of-Pocket Maximum – Self Only
HDHP Out-of-Pocket Maximum – Family



$1,200
$2,400
$6,050
$12,100



$1,250
$2,500
$6,250
$12,500

Health Savings Accounts – Maximum Contribution Limits (§223(b))
Self Only
Family
Catch-Up Contributions (age 55 by the end of the year)



$3,100
$6,250
$1,000



$3,250
$6,450
$1,000

Medical Savings Accounts – Health Plan Limits (§220(c)(2)(A))
Annual Deductible – Self Only
Annual Deductible – Family
Out-of-Pocket Maximum – Self Only
Out-of-Pocket Maximum – Family



$2,100 to $3,150
$4,200 to $6,300
$4,200
$7,650



$2,150 to $3,200
$4,300 to $6,450
$4,300
$7,850

Medical Savings Accounts – Maximum Contribution Limits (§220(b)(2))
Self Only (65% of deductible)
Family (75% of deductible)



$1,365 to $2,047
$3,150 to $4,725



$1,397 to $2,080
$3,225 to $4,837

Transportation Fringe Benefits – Monthly Limits (§132(f)(2))
Parking
Transit Passes and Vanpooling (combined)*



$240
$240



$245
$245

Health FSA Contribution Limit (§125(i))

No limit

$2,500

Employer Adoption Assistance Exclusion (§137)
Maximum Gross Income Exclusion
Modified AGI Phase-out – Start
Modified AGI Phase-out – End


$12,650
$189,710
$229,710


$12,970
$194,580
$234,580

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.