The Internal Revenue Service is raising the contribution limit for employees participating in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plans to $17,500 from $17,000.
The catch-up contribution limit for employees aged 50 and over who participate in those same plans remains the same at $5,500, the agency said its announcement Thursday.
The IRS is changing some of the limits for retirement plans because the cost-of-living index met the statutory thresholds that trigger their adjustment.
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012.
For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000.
For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.
The IRS also made changes to the AGI phase-out range for taxpayers contributing to a Roth IRA. For married couples filing jointly, the phase-out range increased from a range of $173,000 to $183,000 to a range of $178,000 to $188,000. For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000 in 2012.
For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
The AGI limit for the saver’s credit for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750.
Effective Jan. 1, 2013, the limitation on the annual benefit under a defined benefit plan will increase from $200,000 to $205,000. For a participant who separated from service before Jan. 1, 2013, the limitation will be computed by multiplying the participant’s compensation limitation, as adjusted through 2012, by 1.0170.
The limitation for defined contribution plans will increase in 2013 from $50,000 to $51,000.
This article was originally posted at BenefitsPro.com, a sister site of Credit Union Times.