There are several important changes to retirement benefits coming in 2013, including:
Increased limits on IRA and 401(k) contributions. You will be able to contribute another $500 in 2013 to your 401(k) or 403(b) plans when limits increase to $17,500 from $17,000 this year. The IRA contribution limit also increases by $500, to $5,500 in 2013. If you are over the age of 50, your catch-up contribution level remains the same: $1,000 for IRAs and $5,500 for 401(k)s.
Increased Income Limits for Roth IRAs. For singles and heads of households, the earnings limit for contributions to a Roth IRA increase by $2,000 in 2013, to $127,000. For married couples, the increase is $5,000 for earnings between $178,000 and $188,000. Those limits can be bypassed if you convert a traditional IRA to a Roth.
Increased pension insurance limits. The Pension Benefit Guaranty Corp. that insures private pension plans is increasing the maximum guaranteed benefit for retirees over the age of 65 to $57,477 in 2013 from $55,841 in 2012.
Increase in Social Security benefits. Social Security benefits checks will increase by 1.7 percent beginning in January 2013.
Increase in Social Security taxes. Most workers will see a 2 percent hike in their Social Security taxes, as the temporary payroll tax reduction that cut this tax from 6.2 percent to 4.2 percent is set to expire in 2013.
Bigger Medicare Part B premiums. The Medicare Part B premium is set to increase from $99.90 per month to $104.90 in 2013. The Part B deductible will also increase, from $140 to $147.
Saver’s tax credit income limit increase. The modified adjusted gross income (AGI) for workers that participate in a 401(k) or IRA increases by $1,500 to $59,000 for married couples, $29,500 for singles and $44,250 for heads of household in 2013. Those that meet these limits qualify for a saver’s tax credit of $1,000 for individuals and $2,000 for couples.
In addition, the Social Security Administration will halt paper checks on March 1, 2013. Benefit payments will be made via direct deposit into a financial institution account, or applied to a debit card. Retirees who do not opt for the electronic payment option will be automatically enrolled in the debit card program.
If you’d like to learn more about retirement planning, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session™, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.