iThe Internal Revenue Service recently announced cost-of-living adjustments (COLA) to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2013. Although many dollar limits currently in effect for 2012 will change, some limits will remain unchanged for 2013. McDermott Will & Emery has prepared a chart of these 2013 COLA changes.
Recently the Internal Revenue Service (IRS) announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2013. Although many dollar limits currently in effect for 2012 will change, some limits will remain unchanged for 2013. The table below compares the applicable dollar limits for 2012 and 2013 for certain employee benefit programs.*
|
RETIREMENT PLAN LIMITS |
2013 |
2012 |
|
Annual compensation limit |
$255,000 |
$250,000 |
|
401(k), 403(b) & 457(b) before-tax contributions |
$17,500 |
$17,000 |
|
Catch-up contributions (if age 50 or older) |
$5,500 |
$5,500 |
|
Highly compensated employee threshold |
$115,000 |
$115,000 |
|
Key employee officer compensation threshold |
$165,000 |
$165,000 |
|
Defined benefit plan annual benefit and accrual limit |
$205,000 |
$200,000 |
|
Defined contribution plan annual contribution limit |
$51,000 |
$50,000 |
|
Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period |
$205,000 |
$200,000 |
|
ESOP limit for determining the maximum account balance subject to the general five-year distribution period |
$1,035,000 |
$1,015,000 |
|
|
|
|
|
HEALTH AND WELFARE PLAN LIMITS |
|
|
|
Health Flexible Spending Accounts |
|
|
|
Maximum salary reduction limit |
$2,500 |
No limit |
|
|
|
|
|
High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA) |
|
|
|
HDHP – Maximum annual out-of-pocket limit (excluding premiums) |
|
|
|
Self-only coverage |
$6,250 |
$6,050 |
|
Family coverage |
$12,500 |
$12,100 |
|
HDHP – Minimum annual deductible |
|
|
|
Self-only coverage |
$1,250 |
$1,200 |
|
Family coverage |
$2,500 |
$2,400 |
|
HSA – Annual contribution limit |
|
|
|
Self-only coverage |
$3,250 |
$3,100 |
|
Family coverage |
$6,450 |
$6,250 |
|
Catch-up contributions (age 55 or older) |
$1,000 |
$1,000 |
Plan sponsors should update payroll and plan administration systems for the new 2013 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, including open enrollment materials and summary plan descriptions. Also, because 2013 marks the first year the IRS has imposed a limit on health flexible spending accounts, plan sponsors may need to amend plan documents to include the new limit on contributions.
*The dollar limits are generally applied on a calendar year basis; however, certain dollar limits are applied on a plan year, tax year or limitation year basis.
