800/607.0145 tollfree info@midatlanticira.com

12/20/2011

Jack Kiley CPA, CISP

2012 IRA Contribution Limits

IRA Contribution limit remains at $ 5,000 for 2012

Recently the Internal Revenue Service announced the 2012 contribution and cost of living increases regarding IRAs and 401k plans.  The following can be found on the IRS’s website at www.irs.gov.

If you are under 50 years of age at the end of 2012:
The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2012.  This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000.  The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

If you are 50 years of age or older before the end of 2012: 
The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2012.  This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000.  The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI.

The AGI phase-out range for taxpayers making contributions 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, 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.

The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have 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, in which the spouse who makes the IRA contribution 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 to $183,000, up from $169,000 and $179,000.

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal governments Thrift Savings Plan is increased from $16,500 to $17,000.

For more information, please refer to IRS publication 590 or contact us.

MidAtlantic IRA, LLC
800.607.0145 x260
scott.blair@midatlanticira.com

DISCLAIMER: MidAtlantic IRA, LLC. does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.