Changes in Retirement Benefits for 2013

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.

To your family’s health, wealth and happiness!

David Feakes

P.S.  Want to get started on the most important planning you’ll ever do for your family?  Give our office a call at (978) 263-6900 to get started.  You’ll be so glad you did.

David Feakes is the owner of The Parents Estate Planning Law Firm, PC – a law firm for families in the Acton, Massachusetts area.  David helps parents protect the people they love the most.  If you would like to receive David’s exclusive, free report, “Six Major Mistakes To Avoid When Choosing An Estate Planning Attorney,”  you can get it right here.

 

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At The Parents Estate Planning Law Firm, we answer your questions at your convenience; we stay in frequent communication; and we meet to discuss changes in life circumstances and in the law to ensure that your assets are protected.

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