If they have not already, small businesses with retirement plans must report on them to the IRS soon. To help, the IRS has updated its Publication 560, “Retirement Plans for Small Business Plans” for 2013 returns. New this year:
• Compensation limit increased for 2013. For 2013, the maximum compensation used for figuring contributions and benefits increased to $255,000.
• Elective deferral limit for 2013. The limit on elective deferrals, other than catch-up contributions, increased to $17,500 for 2013. This limit applies to participants in SARSEPs, 401(k) plans and 457(b) plans.
• Defined contribution limit increased for 2013. The limit on contributions, other than catch-up contributions, for a participant in a DC plan increased to $51,000 for 2013.
• SIMPLE plan salary reduction contribution limit for 2013. The limit on salary reduction contributions, other than catch-up contributions, increased to $12,000 for 2013 .
• Catch-up contribution limit remained unchanged for 2013. A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. The catch-up contribution limitation for DC plans other than SIMPLE plans for 2013 remained at $5,500, unchanged from the 2012 rate. The catch-up contribution limitation for SIMPLE plans remains at $2,500 for 2013, unchanged from the 2012 rate. The catch-up contributions a participant can make for a year cannot exceed the lesser of either the catch-up contribution limit or the excess of the participant's compensation over the elective deferrals that are not catch-up contributions.
John Iekel is a writer/editor for ASPPA and its sister organizations, including NAPA Net.
