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Inflation Brings Changes to Retirement Plans

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Cost-of-living adjustments have triggered changes to the dollar limitations for pension plans and other retirement-related items in 2012.

The increase in the cost-of-living index met the IRS thresholds requiring many of the limitations to be adjusted, but other limitations will not change.

Workplace retirement plans

finish line ahead
  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increases from $16,500 to $17,000.
  • The catch-up contribution limit for people aged 50 and over remains at $5,500.

Traditional IRAs

  • The deduction for taxpayers who contribute to a traditional IRA is phased out for single people and heads of household covered by a workplace retirement plan with 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, when the spouse who contributes to a traditional IRA also has a workplace retirement plan, the income phaseout range for an IRA deduction is $92,000 to $112,000, up from $90,000 to $110,000.
  • For a taxpayer who contributes to a traditional IRA and 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, up from $169,000 and $179,000.

Roth IRAs

  • The AGI phaseout range for taxpayers who contribute 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 who contribute to a Roth IRA, the income phaseout range is $110,000 to $125,000, up from $107,000 to $122,000.
  • For a married individual filing a separate return who contributes to a Roth IRA and is covered by a retirement plan at work, the phaseout range remains $0 to $10,000.

Saver’s credit

The AGI limits for the saver’s credit, also known as the retirement savings contributions credit, for low- and moderate-income workers are as follows:

  • For married couples filing jointly, $57,500, up from $56,500 in 2011
  • For heads of household, $43,125 up from $42,375
  • For married individuals filing separately and for single people, $28,750 up from $28,250


Working with Ian Shuman, and more recently with Elinor Litwack, has been wonderful. Ian brings a wealth of CPA management experience, which has proven invaluable in helping our firm address management issues.

Ana Ramos |  Associate Director for Administration
Stanley Medical Research Institute