IRA Contribution Limits for Both Roth and Traditional

by Khaleef Crumbley on January 5, 2011

in Retirement,Taxes

IRA Contribution Limits

Below you will find the IRA Contribution Limits for both 2011 and 2012. The IRS recently announced their cost of living adjustments (COLA) for pension plans and other accounts for tax year 2012.

Unfortunately, there were no adjustments made from the 2011 contribution limits of IRAs, 401 (k)’s, or 403 (b)’s. Therefore, Roth IRA contribution limits, Traditional IRA contribution limits, 401k contribution limits, and 403b contribution limits will all remain the same as this year.

Combined Traditional and Roth IRA Contribution Limits:

20122011
Traditional IRA Contribution Limit$5,000$5,000
Roth IRA Contribution Limit$5,000$5,000
IRA Catch-Up Contribution $1,000 $1,000
Total IRA Contribution Limit for Those Over 50$6,000$6,000

For those of you who will be under 50 years of age at the end of the year, the total of your Roth IRA Contribution Limit and your Traditional IRA Contribution Limit is $5,000. However, if your total taxable compensation for the year is less than $5,000, then your IRA contribution limit is equal to the amount of your taxable compensation for 2012.

The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income.

As with the 401k, if you are 50 years of age or older before the end of 2012, then you will be allowed to make a “catch-up” contribution in the amount of $1,000. This will bring your IRA contribution limit to the lesser of $6,000 or the total of your taxable compensation for 2012. This limit can be split between a Traditional IRA and a Roth IRA but the combined limit is $6,000.

For those of you who would rather contribute to an IRA over a 401k because of the added flexibility, please keep in mind that you should still contribute an amount to your 401k that will allow you to take advantage of the full 401k employer match.

Be sure to refer to these charts from the IRS for those who are covered and those who are not covered by a retirement plan at work. Also, see how your Modified AGI affects the amount of Roth IRA Contributions that you can make for 2012.

photo by o5com

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1 krantcents

Thanks for the reminder, although it is on my list. Everyone should have a 401 K, and/or IRA and/or Roth IRA.

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