There's good news for those who collect Social Security benefits and those who want to contribute to pension plans in 2013.

The Social Security Administration recently announced benefit increases for 2013 of 1.7 percent for millions of Americans. For eight million recipients of Supplemental Security Income, the cost-of-living increase will begin on December 31, 2012, while 56 million Social Security beneficiaries will see payment increases beginning in January 2013.

Other changes include a higher wage base on which those who remain in the workforce will pay Social Security tax. In 2012, that maximum is $110,100 and it will rise in 2013 to $113,700.

The IRS also just announced changes to the dollar limitations for contributions to qualified retirement plans for 2013. These limitations are provided through the Internal Revenue Code, and are adjusted annually by the IRS for cost-of-living increases.

Here are the amounts (some remain unchanged):

Annual Qualified Plan Limits

2013

2012

Defined contribution plan dollar limit on additions 
(Section 415(c)(1)(A))

$51,000 $50,000

Defined benefit plan limit on benefits  (Section 415(b)(1)(A))

$205,000 $200,000

Maximum compensation used to determine contributions

$255,000 $250,000

401(k), SARSEP, 403(b) Plan Deferrals (Section 402(g)) &457 Plan deferrals (Section 457(b)(2))

$17,500 $17,000

401(k), 403(b), 457 & SARSEP additional "catch-up" contributions for employees age 50 and older

$5,500 $5,500

SIMPLE deferrals (Section 408(p)(2)(A))

$12,000 $11,500
Simple additional "catch-up" contributions
for employees age 50 and older
$2,500 $2,500
The dollar amount under Section 409(o)(1)(C)(ii) to determine the maximum account balance in an employee stock ownership plan subject to a 5‑year distribution period, and the amount used to determine the lengthening of the 5‑year distribution period $1,035,000/
$205,000
$1,015,000/
$200,000

Compensation defining highly compensated employee(Section 414(q)(1)(B))

$115,000 $115,000
Compensation defining key employee (officer) $165,000 $165,000
The compensation amounts under Section 1.61‑21(f)(5)(i) of the Income Tax Regulations concerning the definition of  "control employee" for fringe benefit valuation purposes $100,000   $100,000

Compensation triggering Simplified Employee Pension (SEP) contribution requirement (Section 408(k)(2)(c))

$550 $550

* IRS note: "Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans."

© Bizactions LLC.