Money Power: New limits set for retirement account contributions
BY KIMBERLY LANKFORD Money Power
Sunday, November 18, 2012
11/18/12 at 3:14 AM
How much can I contribute to my IRA and 401(k) account in 2013? And will the income limit for Roth contributions rise?
The IRS recently announced the new contribution limits for 2013, which increase slightly from 2012. The maximum you can contribute to a 401(k), 403(b), most 457s and the federal government's Thrift Savings Plan rises from $17,000 to $17,500 in 2013. The extra catch-up contribution for people age 50 or older remains $5,500.
You can also contribute more to your IRA in 2013. For traditional IRAs and Roth IRAs, the maximum rises from $5,000 to $5,500. (The catch-up contribution is still $1,000 for people age 50 or older, bringing the total to $6,500 in 2013.)
The income limit for contributing to a Roth also rises slightly - from $183,000 to $188,000 for married couples filing jointly and from $125,000 to $127,000 for singles and people filing as head of household. The amount you can contribute starts to phase out if your adjusted gross income is $178,000 or more for joint filers and $112,000 for singles and heads of household.
There is no income limit for contributing to a traditional IRA, but there are income limits for deducting contributions if you (or your spouse) is covered by a retirement plan at work.
The income cut-off for the saver's credit (officially called the Retirement Savings Contribution Credit) will also rise a bit. This credit is designed to encourage lower-income workers to save for retirement in a retirement savings plan, such as an IRA or a 401(k).
To qualify for the credit, your adjusted gross income must be less than $59,000 if married filing jointly (up from $57,500 in 2012), $44,250 for heads of household (up from $43,125) or $29,500 for singles or married couples filing separately (up from $28,750).
The lower your income, the bigger the credit, up to $1,000. (For more information about the saver's credit, see "A Tax Credit for Retirement Savers" at tulsaworld.com/taxcreditsavers.)
For more information about saving for retirement, see our Jump-Start Your Retirement Plan special report at tulsaworld.com/jumpstartretire
Original Print Headline: IRA contribution limits increased
Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.