The Internal Revenue Service has released 2013 contribution limits for 401(k) and IRA plans, making now a good time to communicate proactive retirement planning to employees.
As of 2013, the maximum IRA contribution increases by $500 to $5,500; 401(k) and similar plans get a similar $500 contribution boost, to a $17,500 upper limit in 2013. The “catch-up” contribution limits for age 50 clients remain the same: $1,000 for IRAs and $5,500 for 401(k)s, 403(b)s, 457s, etc. For small business owners with a SEP IRA or a Solo 401(k) plan, the maximum contribution rises by $1,000 in 2013, to $51,000, and up to $56,500 for those 50 and older.
However, there are income limits to Roth IRA contributions. For 2012 Roth IRA contributions, which can be made until next April 15, Roth IRA contributions are forbidden for single taxpayers with modified adjusted gross income of $125,000 or more while couples filing jointly can’t contribute anything to a Roth IRA with MAGI of $183,000 or more. In 2013, those cutoff points will rise to $127,000 and $188,000 of MAGI.
Donald Jay Korn writes for Financial Planning, a SourceMedia publication.
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