2012 401K, IRA and Roth IRA Contribution and Income Deduction Limits

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[Updated with 2012 details] 2012 tax advantaged retirement plan contribution limits have officially been released by the IRS, with slight increases over 2011 limits; due mainly to cost of living adjustments (COLA). Further with increases in income phase-out thresholds, more people can benefit from employer and self-managed retirement plans.  The table below summarizes key changes between 2012 and 2011:

2012 401K, Roth IRA contribution limits

Notable changes in 2012 include:

  • The contribution limit for 401k, 403b, most 457 plans, and the federal government’s Thrift Savings Plan (TSP) increases from $16,500 to $17,000. The catch-up contribution limit for those aged 50+ remains unchanged at $5,500. Roth IRA contribution limits also remain the same at $5,000, with a $1,000 catchup for those over 50 (so total contribution = $6,000 for those over 50)
  • For workers already covered by an employer sponsored retirement plan (401k, 403b), contributions to a self-managed IRA plan are only tax deductible if their adjusted gross income (AGI) is between $58,000 and $68,000, up from $56,000 and $66,000 in 2011. For married couples, where the spouse is makes a contribution to an IRA plan and 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.
  • The AGI phase-out range for joint/married taxpayers making contributions to a Roth IRA is $173,000 to $183,000 for, 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.
  • Contribution limits for SIMPLE IRA and 401K retirement accounts remains unchanged at $11,500 (minimum income requirement of $500 remains in place). The additional catch up contribution for those over 50, also stays the same at $2,500.
  • The maximum combined employer and employee contributions to all defined contribution plans increased to $50,000 (vs 49,000 in 2011)

Most of the contribution and deduction rules for 401K and IRA type plans will stay the same. IRA to Roth IRA conversions, irrespective of income, will still be allowed but the multi-year pay back and roll-back option may not be available.

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{ 5 comments… read them below or add one }

Candi Tripp January 16, 2013 at 4:41 pm

Hello
I have been reading puplications for over and hour now 590,524,915 etc. and can’t find the answer to this question. I became disabled and had to quit my job. I rolled over my 401k from work to a reg 401 and it cost me a little over $1900.00 in sales charges. Can I deduct those amounts?

Reply

Andy (Author) January 17, 2013 at 9:16 am

As far as I know you cannot deduct 401K rollover/conversion charges. However I am surprised you paid such a high fee. Most IRA providers do this for free (or provide an offsetting credit).

Reply

robert June 25, 2012 at 1:39 am

Does the catchup amount apply to only Roth IRA’s? or does it apply once you have reached 50?

Reply

RJI December 21, 2011 at 6:30 pm

The catch-up contribution limit to Roth IRA is $6,000 not $5,000.

Thanks.

Reply

andys2i December 22, 2011 at 12:14 pm

You are correct. For over 50 it is $6,000. I have updated the numbers. Thanks for catching it and letting me know.

Reply

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