How much will I be able to contribute to my 401(k) in 2012? Are there new income limits for making tax-deductible contributions to an IRA next year?
The IRS just released the new contribution and income-limit figures for 2012, which in some cases are slightly higher than for 2011.
You’ll be able to contribute up to $17,000 to a 401(k), 403(b), most 457 plans or the federal government’s Thrift Savings Plan in 2012. That’s $500 more than the 2011 maximum contribution limit of $16,500. Workers age 50 and older can continue to make catch-up contributions of up to an extra $5,500 for the year, the same amount as in 2011. If you’ve been contributing the maximum to your 401(k) or other retirement plan, think about boosting your salary deferral amount for 2012.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The maximum IRA contribution limit for 2012 remains unchanged at $5,000 ($6,000 if you are age 50 or older by the end of the year). But the income eligibility limits to deduct IRA contributions have increased. Single filers and heads of household who participate in a retirement plan at work can deduct the maximum IRA contribution if their modified adjusted gross income is $58,000 or less and a partial contribution is their income is up to $68,000 (up from $56,000 and $66,000 in 2011). Individuals who do not participate in a workplace retirement savings plan can deduct their full IRA contribution regardless of income.
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 between $92,000 and $112,000 (up from $90,000 and $110,000 in 2011). For an IRA contributor who is not covered by a workplace retirement plan but is married to someone who is covered, the deduction is phased out if the couple’s income is between $173,000 and $183,000 in 2012, up from the $169,000 to $179,000 phase-out range for 2011.
The income eligibility limits to qualify for a Roth IRA contribution have increased, too. Single filers and heads of household can make the maximum contribution to a Roth IRA if their income is less than $110,000 in 2012 (or a partial contribution as long as their income doesn’t top $125,000). Those income eligibility limits are up from the $107,000 to $122,000 phase-out range for 2011. Married couples filing jointly will be able to make the maximum contribution to a Roth IRA in 2012 as long as their modified adjusted gross income is less than $173,000 (and a partial contribution if their joint income does not top $183,000). That’s up from the $169,000 to $179,000 phase-out range for married couples in effect for 2011..
Lower-income individuals may qualify for an extra tax break when they contribute to either an IRA or an employer-based retirement plan in 2012. The income limit to qualify for the savers’ credit increases to $57,500 for married couples filing jointly (up from $56,500 for 2011); $43,125 for heads of household (up from $42,375); and $28,750 for singles (up from $28,250). The size of the credit, which ranges from 10% to 50% of your contribution up to a maximum of $1,000 ($2,000 for married couples), shrinks as your income rises and disappears entirely above those thresholds.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
RMDs, Roth, and SS: Test Your Knowledge of Retirement Tax RulesQuiz Don't let the IRS catch you off guard. Take our quiz to reveal common retirement tax rules that could save (or cost) you thousands.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
IRS Names Its First CEO: But He’s Also Still Running Social SecurityTax News Will this new role make it difficult to address emerging issues like budget and staffing cuts and customer service concerns?
-
Three Popular Tax Breaks Are Gone for Good in 2026Tax Breaks Here's a list of federal tax deductions and credits that you can't claim in the 2026 tax year. High-income earners could also get hit by a 'surprise' tax bill.
-
IRS Phasing Out Paper Checks: What Happens After September 30?Tax Changes Avoid delays when IRS tax refunds and Social Security paper checks are cut off. Here’s what to know.
-
Ask the Editor, September 12: Tax Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
