News Alert: Get the Latest on 401k Limits 2013

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People who are not financially literate must be wondering about the 401K limit. This article aims to inform you the latest news about the IRS 401k contribution and its limit for the year 2013. However, we first need to know what 401K is.


The IRS 401k limit was enacted into law in 1978. Sponsored by employers, it is a retirement savings plan designed for workers to invest a portion of their salary before taxes are being deducted. Likewise, employers proportionately contribute to this retirement plan. Instead of a pension fund which has now become quite expensive, most employers prefer to work on the 401K contribution limits for their workers. 401K limits 2013 require an annual contribution of $17, 500 from employees.


As an employee, you should be properly oriented about your company’s retirement plan. It is advisable that you exceed the minimum 401k contribution limit 2013. This will entitle you to a higher compounded interest. It is also important to consider the inflation rate in saving up for your retirement.

According to A. Ebeling, Forbes Magazine Staff, those with higher income can contribute more through catch-up contribution. 401k limits 2013 allow up to $5,500 catch-up contribution which increases your 401k limit to $23,000.

Useful 401K Charts

The chart below gives an overview of the 401k limits through the years. Notice the slight increase every year.

401k limits 2013

The chart below shows a breakdown of 401k contribution limits 2013 for employers.

401k limits 2013

Know Your 401K Options

Employees who are in their 20’s and 30’s may take advantage of the catch-up amount in their 401k limit 2013 through voluntary monthly salary deduction. Another option is to wait until you turn 50 and pay the entire amount in full.

401K Limits 2013 Recent News

  • If you prefer to pay the catch-up amount through deferred payment, make sure to make the necessary adjustments in your monthly expenses. Otherwise, be prepared to pay the lump sum amount at the end of the year. Greenville Business Magazine illustrated that if you have a yearly income of $100,000, you have to cut down on your other expenses to save up $5,500 at the end of the year. If you have a monthly income of $3,500, make sure you set aside $500 monthly. The business magazine further cited Mark McCall of McGregory & Company, “individuals should look at their investments to see if they have any unrealized capital losses that can be taken to offset capital gains and or to offset ordinary income”.
  • Increasing pension cost has been a prevalent concern for lawmakers in the past few months. Different committees were tasked to focus on this issue since June but no definite revisions have been settled. Some Democratic members feel that employee contributions can be decreased by 1% cutting down on annual pension benefits. On the other hand, the Republican committee members believe that retirement age can be extended without reducing the employee contributions. However, Senate President John Cullerton favored proposal from the Democratic committee members. In an article by Ray Martin of CBS News, it was predicted that 401K limits 2013 will be the same next year. But, formalization has yet to be decided due to the recent government shutdown.

Additional Points to Remember

Managing your finances is one key to save more than the minimum contribution to your 401k limits 2013. The younger you start saving up for your retirement, expect that you will be receiving a higher rate of benefits that will allow you to live comfortably.

Whether pension reform issues remain unsettled or not, it is always best to prepare for your retirement. Plan ahead and secure your future with this vital information concerning the 401k Contribution Limits for year 2013 . Learn more about your retirement options and start saving up!


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