Now that we are several weeks into the New Year, I thought it would be a good idea to review the contribution limits for 2013. Below are the amounts you can contribute (defer) for 2013:
401(k), 403(b) or 457 – Plan – $17,500
401(k), 403(b) or 457 – Plan (Over 50) – $23,000
IRA – $5,500
IRA (Over 50) – $6,500
SIMPLE Plan – $12,000
SIMPLE Plan (Over 50) – $14,500
There are great benefits to deferring. Your money will grow tax deferred (you will not pay tax until you take the money out of your 401k or IRA), and you get a tax deduction in the year you make the contribution. For example, if you’re in the 28% tax bracket and defer $10,000 in your 401k – the full $10,000 will be invested in your 401k or IRA – and you would save $2,800 ($10,000 * .28%) in taxes that you would have paid had you not deferred the money.
