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Will Contribution Limits Rise To $17,500?

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Each October the IRS announces if defined contribution limits will rise for the next calendar year. Increases are based on cost of living adjustments (COLA).

 

 


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  • In 2011 the IRS raised regular contribution limits for 2012 to $17,000 from $16,500; age 50 limits remained at $5,500
  • From 2009 to 2011 regular limit remained at $16,500
  • In 2002 the regular limit was $11,000; age 50 limit was $1,000

 

 

Will the IRS raise limits for 2013?

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Dan Otter

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The inflation adjustments are based on the Consumer Price Index in July, August and September of the year prior to the year to be adjusted. Thus, the adjustments for 2013 will be based on the CPI for July, August and September of 2012. The numbers for July and August have already been announced, but September's numbers won't be announced until mid-October. However, if September's index doesn't change from the August index, it should cause the elective deferral limit to increase to $17,500 for 2013.

 

Please keep in mind that the above is based on my interpretation and calculations. We will have to wait on the annoucement from the IRS for the official word.

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The September CPI was just announced this morning. According to my calculations, which are based on my understanding of the rules for indexing, the deferral limit for 2013 will increase to $17,500. The catch-up will remain at $5,500.

 

However, please keep in mind that these are not official numbers. The IRS should publish the official limits, as well as other related limits, in a few days.

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Guest Joel L Frank

The limit will be $17,500.00 for 2013. What is my prize?

 

Joel

 

Steve--did you let me win?

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