POSTS :: RETIRING SMART . NEW WAYS TO INVEST . AVOIDING DEBT . COOL APPS . GOING GREEN . FINANCE READS . GIVING BACK . FOR WOMEN
:: Positive Personal Finance ::
You Do the Math: IRS Pension Plan Limitations for 2012

–UPSIDEofMoney is a proud member of the Roth IRA Movement

The IRS announced last October the cost of living adjustments (COLA) affecting dollar limitations for pension plans and other retirement items for the 2012 tax year.

Many of the pension plan limitations change for 2012 because the increase in the COLA index met the statutory thresholds needed. Some limitations will remain unchanged. This post highlights the basics of what you need to know.

Here are some of the highlights:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
  • The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
  • Traditional IRA
    The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $173,000 and $183,000, up from $169,000 and $179,000.

    Roth IRA
    The AGI phase-out range for taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for married couples filing jointly, up from $169,000 to $179,000 in 2011. For singles and heads of household, the income phase-out range is $110,000 to $125,000, up from $107,000 to $122,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.

    Saver’s Credit
    The AGI limit for the saver’s credit for low-and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.

    Details available, of course, on www.IRS.gov.

3 Comments to “You Do the Math: IRS Pension Plan Limitations for 2012”

  1. NuView IRA says:

    A lot of people don’t know this, but a traditional IRA can be partially converted into a Roth IRA multiple times in a year, providing significantly more flexibility for investors.

Leave a Reply