- The 2013 annual gift tax exclusion amount will increase for the first time since 2009 to $14,000 per gift to a non-spouse, and $143,000, up from $139,000 for gifts made to a spouse who is not a U.S. citizen. Gifts to a spouse who is a U.S. citizen remain exempt from gift taxes due to the unlimited marital deduction.
- The limitation on elective deferrals (salary reduction contributions) under 401(k), 403(b), and most 457(b) plans, as well as the federal government’s Thrift Savings Plan, is increased from $17,000 to $17,500.
- The limit on “catch-up contributions” for those who are age 50 and over remains unchanged at $5,500 ($2,500 for SIMPLE Plans; $1,000 for IRAs).
- The limit on compensation that may be taken into account under a plan is $255,000, up from $250,000.
- The overall limitation on “annual additions” to a participant’s account under a defined contribution plan is increased from $50,000 to $51,000.
- The basic limitation on the annual benefits under a defined benefit plan is increased from $200,000 to $205,000.
- The dollar thresholds for determining who is a “highly compensated employee” and which officers are “key employees” remain at $115,000 and $165,000, respectively.
- The contribution limitation applicable to SIMPLE IRAs and 401(k)’s increases from $11,500 to $12,000.
- The minimum compensation that may be required for participation in a SEP is unchanged at $550.
- Deductions for IRA contributions will phase out between $59,000 and $69,000 of AGI (previously $58,000-68,000) for single individuals and unmarried heads of household who are covered by an employer’s retirement plan; for married couples filing joint returns, the phase-out occurs between $95,000 and $115,000 of AGI (previously $92,000-112,000) where the contributing spouse is covered by an employer’s plan, or between $178,000 and $188,000 (previously $173,000-183,000) where only the noncontributing spouse is covered by an employer’s plan.
- The phase-out for taxpayers making contributions to a Roth IRA occurs between $178,000 and $188,000 (previously $173,000-183,000) for married couples filing jointly, and between $112,000 and $127,000 (previously $110,000-125,000) for unmarried individuals. (For married individuals filing a separate return and who are covered by an employer’s retirement plan, the phase-out range remains at $0 to $10,000.)
- The maximum contribution to traditional or Roth IRAs increases from $5,000 to $5,500.
- The Social Security Taxable Wage Base increases to $113,700 from $110,100.
1 http://www.irs.gov/uac/2013-Inflation-Adjustments-to-Various-Tax-Benefits
2 http://www.irs.gov/uac/2013-Pension-Plan-Limitations
2 http://www.irs.gov/uac/2013-Pension-Plan-Limitations
For informational purposes only. Neither Farmers New World Life Insurance Company, its employees or Agents provide legal or tax advice. Always consult your own attorney, accountant or tax adviser as to the legal, financial or tax consequences and advice on any particular transaction.
Life insurance issued by Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.
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