Retirement Plan Contribution Limits for 2013

There is some good news in the land of Retirement Planning for 2013.  Of course, it remains hard to predict what our taxes will look like next year, but everybody will have the ability to set aside more than we did last year on a tax-advantaged basis.

401k contributions

For 2013, the maximum 401k contribution has been increased once again.  The new max is $17,500.  For individuals who turn 50 before the end of 2013, the law continues to allow for an additional $5,500 to be contributed, which increases the overall limit to $23,000 for those over 50.
Note that this maximum applies to the total of contributions to a standard (pre-tax) and Roth (after tax) 401k.

IRA contributions and limits

The maximum IRA contribution in 2013 has increased by $500 to $5,500.  The catch-up contribution allowed is $1,000 for individuals who are 50 or older.  As with the employer-sponsored plans – such as the 401k – this maximum applies to the total of contributions to traditional IRAs and Roth IRAs.

Income limits

Income limits for Roth IRA contributions

Individuals can make a full contribution to a Roth IRA if their income is below:

  • $112,000 if filing as a single taxpayer or head of household
  • $178,000 if married filing jointly
A partial contribution can be made for single incomes between $112,000 and $127,000, and for married incomes between $178,000 and $188,000.

Income limits for Traditional IRA deductibility

If you are covered by a retirement plan at work, you can take a deduction for traditional IRA contributions if your income does not exceed:

  • $69,000 for taxpayers filing as single or head of household
  • $115,000 for married filing jointly
Note that the deduction is phased out for single incomes between $59,000 and $69,000.  For married couples, the phase-out applies to income between $178,000 and $188,000.

If you are not covered by a retirement plan at work and…

  • you’re single, you can deduct an IRA contribution regardless of your income level.
  • you’re married and your spouse is not covered by a plan at work, you can deduct regardless of your income level.
  • you’re married filing jointly and your spouse is covered by a plan at work, you can deduct your full contribution if your combined income is less than $178,000, and part of your contribution if your income is between $178,000 and $188,000.

 

 

About Kevin O'Reilly, CFP®

Kevin O'Reilly, CFP®, is a financial advisor who specializes in working with parents of twins and triplets. Have a financial question? Ask Kevin!

Subscribe to Updates!

Subscribe to Multiples & Money! (your information will be kept completely private)

,

Comments are closed.