Roth IRAs

2012 Retirement Account Contribution Limits

You'll be able to stash a little more in your 401(k), 403(b) or Thrift Savings Plan next year. And income limits to deduct IRA contributions will rise.

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.

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.

Most Popular

Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs
Coronavirus and Your Money

Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs

People have lots of questions about the new $3,000 or $3,600 child tax credit and the advance payments that the IRS will send to most families in 2021…
April 14, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Tool to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Tool to Get an Answer

The IRS has an online tool that lets you track the status of your third stimulus check.
April 4, 2021
2021 Child Tax Credit Calculator
Tax Breaks

2021 Child Tax Credit Calculator

See how much money you'll get in advance under the new child tax credit rules for 2021.
April 14, 2021

Recommended

7 Ways to Utilize Your Life Insurance Policy’s Cash Value
life insurance

7 Ways to Utilize Your Life Insurance Policy’s Cash Value

If you no longer need life insurance, don't just cancel the policy and cash out. Instead, consider one of these strategies to capitalize on its value …
April 23, 2021
Taxes on Unemployment Benefits: A State-by-State Guide
state tax

Taxes on Unemployment Benefits: A State-by-State Guide

Don't be surprised by an unexpected state tax bill on your unemployment benefits. Know where unemployment compensation is taxable and where it isn't.
April 22, 2021
The 10 Least Tax-Friendly States for Middle-Class Families
state tax

The 10 Least Tax-Friendly States for Middle-Class Families

Failing to consider state and local taxes before moving your family to another state could cost you thousands of dollars each year.
April 21, 2021
10 Least Tax-Friendly States for Retirees
retirement

10 Least Tax-Friendly States for Retirees

When it comes to state and local taxes, retirees in these states are likely to pay more than retirees in other states.
April 21, 2021