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IRS pushes the limits in 2013

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in Small Business Tax,Small Business Tax Deduction Strategies

The IRS has announced more than two dozen inflation-based adjustments for retirement plans and other tax parameters for 2013, including the following:

  • The annual gift tax exclusion increases to $14,000 (up from $13,000).
  • The “kiddie tax” threshold on unearned income increases to $2,000 (up from $1,900)
  • The elective deferral (salary reduction) contribution limit for participants in 401(k), 403(b), and most 457 plans increases to $17,500 (up from $17,000)
  • The limit for additions to defined contribution plans increases to $51,000 (up from $50,000).
  • The limit for the annual benefit under a defined benefit plan increases to $205,000 (up from $200,000).
  • The maximum compensation taken into account for qualified retirement plans increases to $255,000 (up from $250,000).

Note: Some limits, including the $5,500 catch-up contribution limit for 401(k) participants age 50 or older, remain the same. (IRS Revenue Procedure 2012-41)

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