Contribution Limits Increase for 2013

January 16, 2013

Have you made your 2012 Roth IRA contribution? If you have not yet made the maximum contribution, you still have time! Tax payers have until Monday, April 15^th of 2013 to make their Roth contributions for the 2012 tax year.

If you are within the income limitations to make contributions, a Roth IRA is an excellent investment account as investment growth is tax deferred and withdrawals in retirement can be tax free.

Looking forward for 2013 contributions, some contribution limits for this year have increased. This includes the limits for the Roth and Traditional IRAs and the majority of employer sponsored plans such as 401ks and 403bs.

A very good practice is to contribute enough of your salary to receive at least the employer match. Also, pay raises often present an easy opportunity to increase your deferral, while reducing your adjusted gross income.

If you will be celebrating your 50th birthday this year, it is also a good time to make sure that your HR Department enables the ‘catch-up’ provision on your employer sponsored plan. This will help you meet the maximum contribution limits throughout the year.

The contribution limits for nearly all types of retirement plans are listed in the following chart:

Qualified Plans	2012	2013
401k, Roth 401k, and 403b plans	$17,000	$17,500
Catch-up for ages 50 & over	$5,500	$5,500
457 Plans of tax exempt employers	$17,000	$17,500
Catch-up for ages 50 & over	$5,500	$5,500
SIMPLE IRA or SIMPLE 401k plans	$11,500	$12,000
Catch-up for ages 50 & over	$2,500	$2,500
Limits on annual additions to SEP Plans	$50,000	$51,000
Traditional and Roth IRAs	$5,000	$5,500
Catch-up for ages 50 & over	$1,000	$1,000

Still unsure how much (and in which accounts) you should be contributing to? An updated financial plan may be your first step in understanding how to take advantage of the best investment accounts for your situation. Contact us today to see how we can help you with a new plan to get on track for 2013.

Photo credit: 401(K) 2013

Heather Gudac

Heather is our Chief Operating Officer and partner with the firm. Heather is responsible for overseeing operations across our firm to enhance the quality of our client relationships. She began her career with Financial Symmetry in 2006 as an intern and became a shareholder in 2013.