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IRS Estate Planning and Pension Plan Limits for 2013
Wednesday, 21 November 2012 13:52

How much you can save for retirement and gift to your heirs is changing in 2013.

The Internal Revenue Service (IRS) has released Revenue Bulletin 2012-45 containing the 2013 inflation adjustments and Revenue Procedure 2012-77 which details inflation adjustments for pension plans and other related retirement savings.

The 2013 estate planning amounts include:

  • The annual exclusion amount increased to $14,000.
  • The annual gift tax exclusion for gifts to a non-citizen spouse increases to $143,000.
  • The maximum valuation decrease pursuant to Section 2032A special valuation election increases to $1,070,000.
  • The maximum value of the business interest used to determine the "2-percent portion" of the deferred estate tax for Section 6166 increases to $1,430,000.
  • Recipients of gifts from certain foreign persons may have to report these gifts if the aggregate value of gifts received in a taxable year exceed $15,102.
  • The per diem limitation for periodic payments received under a qualified long-term care insurance contract or a life insurance contract is $320.

Some of the 2013 cost of living adjustments for pension plans highlights include:

  • The maximum elective deferrals for individuals who participate in 401(k), 403(b), and 457 plans increases to $17,500, but the catch-up contribution for participants 50+ remains at $5,500.
  • The maximum contribution for defined contribution pension plans increases from $50,000 to $51,000.
  • The maximum annual benefit that may be provided under defined benefit pension plans increases from $200,000 to $205,000.
  • The maximum compensation that may be taken into consideration for a qualified plan increases from $250,000 to $255,000.

These increases in funding and gifting limits are all good news. Unfortunately, both the estate and income tax rates are also changing in 2013, and they are very likely to increase.


Brent D. Gardner, CLU, ChFC

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