5 must-have Finance year-end updates

We’re in the thick of it now! The major push toward year-end is upon us, which means that Finance is likely busier than it is at any other time of the year.

And in addition to the work needed to close out the year, there’s no shortage of updates your staffers must have the minute we flip the calendar into 2013.

With time at a premium, we have assembled all the key updates you need for the new year, all in one place.

The Standard Mileage Rate

IRS just released this must-have update for A/P. In 2013 the mileage rates are:

• 56.5 cents per mile for all miles of business use (business standard mileage rate)
• 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization, and
• 24 cents per mile for moving and medical expenses.

Cite: IRS N-2012-72.

The Taxable Wage Base

Here’s the biggie for Payroll. For 2013, Finance must withhold taxes on the first $113,700 each employee earns. That’s a 3.2% increase over this year’s taxable wage base.

Retirement Plan Cost of Living Adjustments

Considering your retirement plan is one of the most important benefit you can offer to employees, these new limits are more important than ever:

• The limitation on the exclusion for elective deferrals under 402(g)(1) [e.g., 401(k) and 403(b) plans] increases to $17,500 (from $17K).
• The limit on annual additions to defined contribution plans under 415(c)(1)(A) jumps $1K to $51,000.
• The limit on the annual benefit under a defined benefit plan contained in 415(b)(1)(A) increases to $205K (from $200K) for limitation years ending after Dec. 31, 2010.
• The comp amount under 408(p)(2)(E) regarding elective deferrals to SIMPLE accounts is $12,000 ($500 more).
• The limitation under 457(e)(15) concerning elective deferrals to deferred comp plans of state and local governments and tax-exempts increases to $17,500 (up $500).

What won’t change in 2013:

• the limit used in the definition of “highly compensated employee”
• the limit for the definition of “key employee” in a top-heavy plan, and
• the limits for catch-up contributions to 401(k), 403(b) and 457(b) plans, as well as an employer’s SIMPLE?plan, for individuals age 50 or over.

Cite: IRS?IR-2012-77, 10-18-12.

Health-Savings Account Limits

If you offer employees a consumer-driven health plan, these updates will be mission critical:

A high deductible health plan is a plan with an annual deductible of:

• $2,150-$3,200 for individual coverage (vs. $2,100-$3,150 in 2012), and
• $4,300-$6,450 for family coverage (vs. $4,200-$6,300 in 2012).

Maximum out-of-pocket expenses can be no more than:

• $4,300 for individual coverage (vs. $4,200 in 2012), and
• $7,850 for family coverage (vs. $7,650 in 2012).

Cite: IRS Revenue Procedure 2012-41, 10-18-12, www.irs.gov

Flexible Spending Accounts

This is a new limit for your staffers this year – and likely one some employees won’t be thrilled with.

Starting Jan. 1, 2013, employees can only put a maximum of $2,500 a year into their flex spending accounts. That comes courtesy of the Affordable Care Act.