March 26, 2012
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
- 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.
- 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.
- 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.
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
This article was originally posted on March 26, 2012 and the information may no longer be current. For questions, please contact GRF CPAs & Advisors at firstname.lastname@example.org.