New tax options for near-retirees

The IRS has increased the maximum amount of money you can put into your 401(k) retirement savings account for the tax year 2012, raising it by $500 to $17,000.

That's not a huge amount, but you might want to use the occasion to not only increase your 401(k) contributions, but also look at other tax season savings available to you.

Workers over 50 years old can kick in an additional $5,500 to catch up on savings. That amount wasn't increased along with the maximum contributions, however. Annual contributions to traditional and Roth IRAs will remain limited to $6,000.

Why the contribution level went up

The increase is the first since 2009 and it reflects an increase in the cost of living. The IRS explained that the cost-of-living index met the statutory thresholds needed to trigger an adjustment.

This could affect the 33 percent of workers ages 21-64 in the U.S. who use 401(k) savings account programs. According to the Associated Press, only 9 percent of those with a 401(k) retirement savings account contributed the maximum amount to their plans.

The elective deferral limit for 403(b), most 457 plans and the federal Thrift Savings Plan also increased from $16,500 to $17,000.

Other ways to save on taxes

Although 401(k) retirement savings accounts are the biggest work-related tax benefit, there are other tax-related benefits that workers should consider taking advantage of next year as they adjust their 401(k) deductions.

One of those is a flexible health spending account, which lets you set aside up to $5,000 of pre-tax earnings to pay for doctor's visits, co-pays, medicine and other health-related expenses. Even over-the-counter medicines such as pain relievers and sunblock can be purchased from this account if it's prescribed by your doctor.

Although the IRS hasn't previously capped how much you can put in your health spending account, starting in 2013 your contributions will be limited to $2,500 a year.

Another flexible spending account for dependent care lets you set aside pre-tax dollars for child care or elder care. That savings account is capped at $5,000 a year, and both you and your spouse have to be working to qualify.

The benefits of retirement cash

As you plan your tax benefits for 2013, consider accumulating some unencumbered cash as a portion of your retirement savings accounts. Although interest rates on deposit accounts are low--even those earning the highest CD rates--cash reserves are not subject to wild fluctuations like the stock market and can add stability.

Having cash for a year's worth of living expenses is also wise as you approach retirement age. That way if there is a downturn just as you retire, you can live off the cash rather than having to sell stocks at low prices.

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