2012 vs. 2013 IRA Maximum Contribution, Income and Deduction Limits Factoring in Employer Coverage Restrictions

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I’ve written a fair bit on tax-advantaged individual retirement plans, but still keep getting lots of questions on this topic. This is likely due to two main factors. One, thanks to the complexities of our tax code, it is not always easy to find current and applicable IRA/401K information. Secondly, because you can have multiple tax-advantaged accounts (e.g a 401K and Roth IRA account) at the same time it is not clear what and how much you can contribute. Hopefully this article can make things clearer when it comes to Individual Retirement Accounts (IRA). I am using information directly from the IRS, so you have the official word.

There are 3 things you need to consider when determining if you can make IRA contributions. The first is whether you (or your spouse if applicable) already contribute to an employer sponsored retirement account, like a 401K or 403b plan. Secondly you need to see what you can contribute based on your Modified Adjusted Gross Income( MAGI). Finally you need to determine how much you can contribute based on your filing status and age.

Below are the 2012 and 2013 limits for Traditional IRA plans. For past years see the 401K/IRA resource page.

2012 IRA Contribution Limits

If you ARE already contributing to an employer plan….

Then your contributions may only be tax deductible if your income is as follows.

If Your Filing Status Is… And Your Modified AGI Is… Then in 2012 You Can Take…
single or
head of household
$58,000 or less a full deduction up to the contribution limit of $5,000 ($6,000 if >50)
more than $58,000 but less than $68,000 a partial deduction
$68,000 or more no deduction
married filing jointly or qualifying widow(er) $92,000 or less a full deduction up to the contribution limit of $5,000 ($6,000 if >50)
greater than $92,000 but less than $112,000 a partial deduction
$112,000 or more no deduction
married filing separately less than $10,000 a partial deduction
$10,000 or more no deduction
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “single” filing status.        Source : IRS

Note that the above are the maximum contributions you can deduct for all of your traditional AND Roth IRAs in the 2012 tax year. The IRA contribution limits does not apply to rollover contributions.

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If you are NOT covered by an employer or work related retirement plan….

Then your income limits where a tax deduction on your contributions are allowed are higher. However the status or your spouse’s retirement plan coverage also affects your contribution and deduction levels. The following shows the maximum deduction/income limits applicable this year.

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
single, head of household, or qualifying widow(er) any amount a full deduction up to the amount of $5,000 ($6,000 if >50)
married filing jointly or separately with a spouse who is not
covered by a plan at work
any amount a full deduction up to the amount of $5,000 ($6,000 if >50)
married filing jointly with a spouse who is covered by a plan at work $173,000 or less a full deduction up to the amount of $5,000 ($6,000 if >50)
more than $173,000 but less than $183,000 a partial deduction.
$183,000 or more no deduction.
married filing separately with a spouse who is covered by a plan at work less than $10,000 a partial deduction.
$10,000 or more no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “single” filing status.

2013 IRA limits (and changes relative to 2012)

2012 and 2013 IRA Contribution Limits

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