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:
2012 2011 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.
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