IRS Increases IRA Limits To Keep Up With Inflation
New rules will kick in next year enabling workers to put more money into their 401(k)s and individual retirement accounts. The move has been made the Internal Revenue Service in order to keep up with inflation, and means that the annual limit on contributions to 401(k) plans is rising to $17,500 from $17,000. Annual contributions to IRAs, both traditional and Roth, are increasing to $5,500 from $5,000, for the first time since 2008 that the limit has been increased. Although the gesture is nice, it is merely symbolic, as those amounts do not even begin to trace the sort of price increases that precious metals like gold and silver, etc. have made.
Those individuals over 50 years old, the additional “catch up” amount allowed will remain the same at $5,500, effectively meaning the overall limit for such workers will be rising to $23,000 from $22, 500. Alongside increasing the contribution limits, the Internal Revenue Service has also expanded the number of people eligible to contribute to Roth IRAs. For married couples, the upper income limit rises to $188,000 from $183,000. For singles, the cap will increase to $127,000 from $125,000. (adjusted for gross income)
Two other changes coming in 2013 is the IRS raising the limit on tax-free gifts to $14,000 from $13,000. Americans living abroad will be able to exclude up to $97,600 in foreign earned income starting next year, a modest increase from the current $95,100.
Despite this option, counties and companies the world over are doing what they can to save money on their 401ks. IBM also has pared its 401k package, and it is likely other companies will follow suit.