ROSELAND, N.J., March 13, 2013 /PRNewswire/ -- ADP®, a leader in human resource and payroll outsourcing solutions, highlighted today several important steps small-business owners can take to help navigate changes stemming from the recently enacted American Taxpayer Relief Act (ATRA). By carefully selecting an employer-sponsored tax-qualified retirement plan, business owners can get much-needed relief from tax increases they experience as a result of ATRA, with the added benefit of helping their employees prepare for retirement.
Passed late last year, ATRA created several important changes to the tax law for both income and payroll taxes in 2013. The Act effectively maintains the reduced income tax rates adopted in 2001 and 2003 for individuals earning up to $400,000 and joint filers earning less than $450,000. Income above those levels will be taxed at 39.6 percent, up from 35 percent. The expanded 15 percent bracket for joint filers, commonly referred to as marriage penalty relief, also was extended. These tax rates were extended permanently for wages paid after Dec. 31, 2012.
Meanwhile, employee Social Security tax rates jumped to 6.2 percent for 2013 wages, up to the taxable wage limit of $113,700. In 2011 and 2012, the Social Security tax rate was 4.2 percent. For more information about ATRA and the resulting tax law changes, click here to view a video featuring ADP Retirement Services' Chris Augelli.
"Taxes are rising for all Americans, regardless of age or income bracket," said Chris Augelli, vice president of product marketing and business development for ADP Retirement Services. "The good news is that employer-sponsored tax qualified retirement plans can provide some relief in this new financial environment."
In 2013, workers can invest more of their pre-tax earnings in an employer-sponsored retirement plan. The maximum an individual employee can contribute to a 401(k) plan is $17,500, up $500 from last year. Individuals ages 50 and older can now contribute an additional $5,500 in "catch-up contributions" in their 401(k) accounts. This is $500 more than was allowed last year.
Similarly, individuals participating in a SIMPLE IRA plan can contribute an additional $500 to their IRAs in 2013, up to a maximum of $12,000 per year. Those who are 50 and older can make an additional $2,500 in catch-up contributions, also a $500 increase over last year's limit.
"One of the advantages of these plans is they allow people to save for the future with pre-tax dollars," said Augelli. "This lowers their current federal taxable income, which may enable them to pay less in federal income taxes and take more income home."
ADP's retirement plans are easy-to-manage and provide the resources, materials and online tools employees need to become retirement ready. ADP works with companies to provide retirement savings plans that are tailored to employers' specific needs and align with their strategic business goals.
"ADP does not sponsor or manage its own investment funds, so we can be objective about investment options in our plans," said Augelli. "In this regard, our clients never have to worry about a conflict of interest with regard to fund make-up, and we fully disclose our compensation we earn from the investment funds we make available. They know the information we provide to them is based solely on what is best for their business and their employees. And we're always here to help clients understand the latest laws, regulations and best practices for ensuring a secure retirement, regardless of the economic or political climate."
For more information on how ADP can help you access a new road to retirement, call us today at 800-432-401k or visit us on the Web at www.adp.com/401k.
ADP maintains a dedicated team of professionals who carefully monitor all federal and state legislative and regulatory measures affecting human resource, payroll, tax and benefits administration, and ensure that ADP systems are updated as relevant laws evolve. For the latest on late-breaking federal tax law changes, visit the ADP "Eye on Washington" web page located at www.adp.com/regulatorynews.
Please note: ADP "Eye on Washington" notices are provided as a courtesy to ADP clients to assist in understanding the impact of certain regulatory requirements. They should not be construed as tax or legal advice, and interested parties are encouraged to consult with appropriate legal and/or tax advisors.
About ADP
ADP® (NASDAQ: ADP), with more than $10 billion in revenues and approximately 600,000 clients, is one of the world's largest providers of business outsourcing and human capital management solutions. Leveraging over 60 years of experience and a global footprint spanning more than 40 countries, ADP offers a wide range of human resource, payroll, talent management, tax and benefits administration solutions from a single source, and helps clients comply with regulatory and legislative changes, such as the Patient Protection and Affordable care Act (ACA). ADP's easy-to-use solutions for employers provide superior value to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine, recreational vehicle, and heavy equipment dealers throughout the world. For more information about ADP or to contact a local ADP sales office, reach us at 1.800.225.5237 or visit the company's Web site at www.adp.com.
Contact:
Jim Duffy
ADP
(973) 712.2070
Jim.Duffy@adp.com
SOURCE ADP