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IRS announcement on 401(k) plan maximum contribution expected next week

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IRS announcement on 401(k) plan maximum contribution expected next week

An Internal Revenue Service announcement on the maximum contribution that can be made to 401(k) plans, which was delayed by the 16-day partial government shutdown, is expected next week, a benefit consultant says.

On Oct. 30, the Labor Department will release the September increase in the Consumer Price Index. “We expect announcements the same day of Social Security cost-of-living adjustments, taxable wage base and (Internal Revenue Code) retirement plan limits, including 401(k) elective deferral limits,” Mercer L.L.C. said in a newsletter.

Those increases are based on the one-year rise in the Consumer Price Index for the 12-month period ending Sept. 30.

In 2013, the maximum annual contribution an employee can make through salary reduction to a 401(k) plan is $17,500, while the maximum catch-up contribution employees age 50 and older can make to 401(k) plans is $5,500.

In addition, in 2013, the maximum annual benefit that can be funded through a defined benefit plan for a plan participant is $205,000, while the amount of employee compensation that can be considered in calculating pension benefits is $255,000.