2013 Social Security COLA and 401k Contribution Limit Increases Confirmed

Walmart Organic Produce

The Bureau of Labor Statistics announced September CPI this morning. It confirmed my previous estimates for 2013 Social Security COLA increase and 2013 401k contribution limits.

September CPI-W saw an increase of 0.5% from the previous month. This made the Q3 average CPI-W 1.7% higher than the previous year. As a result, 2013 Social Security COLA increase will be 1.7%. Previously I estimated it would increase by 1.6%.

September CPI-U was 0.4% higher than August. Calculated from the Q3 average CPI-U and a rounding floor, the inflation adjusted 2013 401k, 403b, and 457 contribution limit will be $17,500, $500 higher than in 2012.

The SIMPLE 401k contribution limit will go from $11,500 in 2012 to $12,000 in 2013, also $500 higher.

Not calculated from September CPI but closely related to the 401k contribution limit is the 2013 IRA contribution limit. It will also go up by $500 from $5,000 in 2012 to $5,500 in 2013.

The age 50 catch-up limits remain unchanged at $5,500 for 401k, 403b and 457 plans, $2,500 for SIMPLE plans, $1,000 for IRA.

The maximum addition to all qualified defined contribution plans from the same employer will go up $1,000 from $50,000 in 2012 to $51,000 in 2013.

Separately, the Social Security Administration announced that the maximum wages subject to Social Security tax (the "Wage Base") will go up from $110,100 in 2012 to $113,700 in 2013.

[Photo credit: Flickr user Walmart Stores]

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Comments

  1. says

    Interesting stuff; we’ll probably hear about seniors pissed about the 1.7% but with interest rates where they are and inflation only hitting a few segments (oil and gas are a problem, but only count for a small portion of government inflation measures), the 1.7% will have to do. Interesting to see Roth IRA move up like that too; I feel like it’s been $5000 forever!

  2. says

    Darwin – Yes there were people complaining about the low COLA on the linked previous post a month ago when I projected it was going to be 1.6%. Some thought these are done administratively and Congress or the President is giving the short end of the stick to seniors. The fact of the matter is that seniors at least get an auto-increase while working folks don’t have that luxury.

  3. says

    RabbMD – Because by law they adjust by different indexes. The benefits adjust by a consumer price index (CPI-W). The wage base adjusts by a national average wage index. Last year the benefits went up more than wages; this year the reverse.

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