Sunday, 20 April 2014
401k Contribution Limits PDF Print E-mail

Generally, there are some limits on contributions that apply to the 401K plans. The first relates to the limits imposed on the employee, and the second is related to the limits imposed on the employer. The third rule is associated with a pre-tax contributions compared to total contributions.

 

Not so long ago IRS has released the official 2013 401k, 403b and other restrictions on pension contributions meaning contribution limits. These contribution limits have been updated basing on the cost which has been taken in 2012 (2013) of Cost-Of-Living Adjustments. In this year COLA (Cost-Of-Living Adjustments) value has not been changed and it means that contribution limits remains the same. For many of us it is good news because the most of owners were concerned that the limits may be changed. Every year in October, contribution limits for 401k, 403b, IRA, Roth and Roth IRA are adjusted in accordance with a formula based on inflation (due to COLA) in the third quarter compared with the quarter last year.

 

 

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Pre-Tax Employee Contribution Limits

In 2011, before taxes and tax deferred, 401K contribution limit for employees is $ 16500. In 2012, the contribution limit raised to $ 17000. In 2013, the limit has been increased to $ 17,500 and remained at that limit in 2013. Between 2013-2014 and above, 401K contribution limits to inflation index may be increased in increments up to $ 500, and in 2014 it will be $ 18,000.

 

Total 403k Contribution Limits

It is important to know that from year to year contribution limits increase due to inflation. In 2013, a total amount of both employee and employer contributions is limited to the least of 100% of your compensation or $ 49,000 - the same limitation that applied in 2012. In 2013, these restrictions will be adjusted for inflation, and moved up $ 1000 increments. This amount includes a limitation of contribution before tax and after-tax contributions.

 

401k Limits IRS | 401k Rules IRS

 

We present these 401K limit for you in general terms. Terms of 401K plans are complex and they depend on several factors, including salary, total employee involvement, and before tax, compared with after the payment of contributions. Issues are specific to your 401K plan can be reviewed by the Administrator of your employer.

 

2013 Roth IRA Contribution Limits


What are the 2013 Roth IRA contribution limits?

Your specified Roth IRA contribution limit differs according to...

* Your tax filing status
* Your income level
* Your age

So let's glance at how each of those criterions impacts your annual contribution limit.

2013 Roth IRA Maximum Contribution


Unless you incur too much towards qualify, the maximum 2013 Roth IRA contribution limits are:

* $5,000 whether you're below age 50
* $6,000 whether you're again age 50

As a general pattern, these are the maximum contribution limits. But keep within mind, there are always exceptions towards the rule.

Nevertheless, these aren't the maximum limits for everyone.
Because your maximum 2013 Roth IRA contribution limit phases out as your income jumps above the threshold for making the maximum contribution.

Pre-Tax 401k Contribution Limits

Let us briefly consider some tax contribution limits set by the IRS in the recent past, and over the next few years:

* 2004 - $ 13000
* 2005 - $ 14000
* 2006 - $ 15000
* 2007 - $ 15500
* 2008 - $ 15500
* 2009 - $ 16500
* 2010 - $ 16500
* 2011 - $ 16500
* 2012 - $ 17000
* 2013 - $ 17500
* 2014 - $ 18000

 


The above table shows that in 2014 the contribution limits that apply to the 401K plans will be indexed for inflation - the form of cost of living index. These restrictions will move in $ 500 increments.

For those of you who have been put off retirement planning and have reached age 50 or older have the privilege of adding a new plan in the form of catch-up provisions.

Pre-Tax 401K Catch Up Contribution Limits

For tax years starting after 2001, a plan may allow participants any person who are age 50 or through at the end of the calendar year to make added discretionary deferral contributions. These supplemental contributions (commonly cited to as catch-up contributions) are not issue towards the general limits that request to 401k plans. The current 401k rules allow plan participants that reach age of 50 and calendar year exceeds make additional catch up contribution limit tax basis, as indicated below:

* 2004 - $ 3000
* 2005 - $ 4000
* 2006 - $ 5000
* 2007 - $ 5000
* 2008 - $ 5000
* 2009 - $ 5500
* 2010 - $ 5500
* 2011 - $ 5500
* 2012 - $ 5500
* 2013 - $ 5500



As in the case of the "standard" contribution limits, catch-up "contribution limits will continue to be indexed for inflation in 2014 could increase to $ 500 increments. In 2013, the catch-up limit remains at $ 5500.

 

Employer Contribution Limits

In addition to the contribution limits appear in the tax laws, there can be no employer contribution to the restrictions imposed 401K plan. The contribution limit for employers is set at 6% pre-tax compensation to the employee.

 

This means that an employee with a total compensation package of $ 100,000 can contribute $17,500 in 2013, pre-tax basis, and their employer can contribute another $ 5500 for a total of $ 23,000. If you are over 50 years, then you can make another $ 5500 before tax, bringing the total to $ 28500.

 

IRA Accounts and Options

Affordable options for your 401k, traditional IRA and Roth IRAs: