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News & Alerts

2013 Rates for Dollar Limitations on Benefits and Contributions

January 2013

The Internal Revenue Service has announced rates applicable to dollar limitations on benefits and contributions.  The limitations reflect the first modest increases in three years.

Compensation.  The compensation limit for determining benefits under qualified retirement plans increases to $255,000, up from $250,000 in 2012.

Annual Addition Limitations.  The annual benefit limitation for defined benefit plans under Section 415 of the Code is increased in 2013 to $205,000, as compared to $200,000 in 2012.  The annual addition limitation for defined contribution plans increases by $1,000 to $51,000 in 2013.

401(k) Plan Limitations.  The annual salary deferral limitation for 401(k) contributions increases to $17,500 in 2013.  The "catch-up" contribution limitations for 401(k) participants 50 years of age or older is still $5,500 in 2013.

Key Employee Definitions.  The limitation in officer compensation for the definition of key employees remains at $165,000 in 2013.

Highly Compensated Employee Definition.  The compensation limitation for determining which participants in a qualified plan are highly compensated employees remains at $110,000 in 2013.

Health Savings Account.  The health savings account limits increased for 2013.  For 2013, the minimum deductible amounts for High Deductible Health Plans ("HDHP") will be $1,250 for self-only coverage or $2,500 for family coverage.  The maximum annual out-of-pocket expenses for an HDHP increased to $6,250 (a $200 increase) for self-only coverage or $12,500 (a $400 increase) for family coverage.  The maximum contribution limits for 2013 for health savings accounts for individuals participating in an HDHP are $3,250 for self-only coverage and $6,450 for family coverage.  Additionally, the $1,000 "catch-up" contribution that employees over the age of 55 years old may make did not increase in 2013.

Health Flexible Spending Account.  In 2013, the maximum amount that can be deferred to a health FSA is limited to $2,500.

Qualified Transportation Fringe Benefits. The American Taxpayer Relief Act (the "Fiscal Cliff" legislation) provided parity between qualified parking and qualified transit, so that the maximum monthly pre-tax benefit in 2013 for transit is raised to $245--the same amount that is available for monthly parking. This "parity" provision is to expire at the end of 2013, so unless extender legislation is passed later in 2013, the monthly transit benefit in 2014 will fall back to $125.

If you have any questions concerning dollar limitations contained in the Internal Revenue Code, or any other issues regarding qualified or non-qualified retirement plans, please contact any of the attorneys in our Employment or Wealth Preservation Practice Groups.

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