Good news! The Internal Revenue Service has raised the annual limit on contributions to 401(k)s and individual retirement accounts.

The new contribution limits for 2013 are the following:

• 401(k): $17,500 ($23,000 if you are 50 years old or older)
  
• Traditional/IRA Rollover: $5,500 ($6,500 if you are 50 years old or older)
• Roth IRA: $5,500 ($6,500 if you are 50 years old or older)
• SIMPLE IRA: $12,000 ($14,500 if you are 50 years old or older)
• SEP IRA: $51,000 ($51,550 if you are 50 years old or older)

Remember you can still make IRA contributions until April 15, 2013 for tax year 2012 but the old 2012 contribution limits will apply.

Why is this good news?

First, it’s always nice to have the ability to defer taking the tax hit on a bit more money.  Second, these increased contribution limits give you the opportunity to put aside more money for your retirement. This accumulation is often more important than allocation, particularly when you’re first staring off as an investor.  Your personal savings rate, the amount of money you’re saving and investing for the future, is just as critical as your rate of return.