This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

ADP® Assists Businesses In Addressing Impact Of 2013 Tax Law Changes

Stocks in this article: ADP





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."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs