401(k) and IRA Changes Coming in 2013

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2013 will see some important changes made to peoples’ 401(k) and IRA plans—and other adjustments to retirement accounts. As Quizzle blog has said before, it’s never too early to consider retirement planning, so no matter your age group, take note.

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401(k) Contribution Limit Increase: Limits will be upped for 401(k)s, 403(b)s, and the federal government-administered Thrift Savings Plan—from $17,000 to $17,500 in 2013. (But be advised, the so-called ‘catch-up contribution’ for those 50 years old and over will remain limited at $5,500.)

IRA Contribution Limit Increase: Limits for those who meet the income requirements are set to increase from $5,000 to $5,500. (Catch-up limits here, too, remain unchanged at $1,000.)

More 401(k) Fee Information: Starting in 2013, participants will receive both quarterly and annual statements listing all fees charged to their accounts and returns—as judged against a benchmark.

Higher IRA Income Limits: Tax deductions will be phased out for singles and heads-of-household with work-based retirement plans or those making traditional IRA contributions. This affects those with a modified adjusted gross income between $59,000 and $69,000—up from $58,000 and $68,000. This change is attributed to the increase in the cost-of-living index, per the IRS.

For couples with a spouse making IRA contributions (covered by a workplace retirement plan), the phased-out income range is between $95,000 and $115,000—an increase of $3,000 from this year. (IRA contributors without a workplace retirement plan, but married to someone covered by one, the deduction is phased out once the couple’s income is between $178,000 and $188,000—a $5,000 increase from 2012.)

Increased Roth IRA Limits: Singles and heads-of-household can make contributions to Roth IRAs until their earnings reach between $112,000 and $127,000—up $2,000. For couples, the modified adjusted gross income phase-out window is between $178,000 and $188,000, (up from $173,000 to $183,000 in ’12.) Important note: those making more can still contribute to Roth IRAs with a conversion of traditional IRA assets to Roth.

Saver’s Credit Income Limit Increase: Couples can make an additional $1,500 in 2013 and still qualify for the saver’s credit—worth $1,000 for individuals and $2,000 for couples. The modified adjusted gross income limit for couples: now $59,000 from $57,500. For singles: $29,500 from $28,750. Heads-of-household can claim the credit until their earnings threshold meets $44,250—up $1,125 from 2012.

Got all that? We know it’s a lot to process, but it’s important stuff, so go ahead and re-read if you need to.

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Will these changes help you save more? Do you feel you’re getting the most out of your 401(k)s, 403(b)s, and IRAs? Let us know how you feel your retirement planning is coming along.