Many retirement plan and IRA limits are indexed for inflation each year. Some of the key numbers for 2012 are discussed below.
Elective deferrals
If you are lucky enough to be eligible to participate in a 401(k), 403(b), 457(b), or SAR-SEP plan, you can make elective deferrals of up to $17,000 in 2012, up from $16,500 in 2011. If you are age 50 or older, you also can make a catch-up contribution of up to $5,500 to these plans in 2012. This is unchanged from 2011. Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.
If your 401(k) or 403(b) plan allows Roth contributions, your total elective contributions, pretax and Roth, cannot exceed $17,000 or $22,500 with catch-up contributions. You can split your contribution any way you wish. For example, you can make $10,000 of Roth contributions and $7,000 of pretax 401(k) contributions. It's up to you.
If you participate in a SIMPLE IRA or SIMPLE 401(k) plan, you can contribute up to $11,500 in 2012 (unchanged from 2011). If you are age 50 or older, the maximum catch-up contribution to a SIMPLE IRA or SIMPLE 401(k) plan in 2012 is $2,500 which is unchanged from 2011.
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CONTRIBUTION LIMITS: 2012 TAX YEAR*
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Plan Types
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Annual Dollar Limit
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Catch-up Limit
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401(k), 403(b), gov’t 457(b) plans
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$17,000
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$5,500
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SIMPLE plans
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$11,500
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$2,500
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Traditional and Roth IRAs
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$5,000
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$1,000
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*Contributions can't exceed 100% of your income. Special catch-up rules apply to 403(b) and governmental 457(b) plans.
IRA limits remain the same for 2012
The amount you can contribute to a traditional or Roth IRA remains at $5,000 or 100% of your earned income, if less for 2012, and the maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to an IRA in addition to an employer-sponsored retirement plan. But if you (or your spouse) participate in an employer-sponsored plan, your ability to deduct traditional IRA contributions may be limited, depending on your income. Roth contributions are also subject to income limits.
Some other key numbers for 2012
For 2012, the maximum amount of compensation your employer can take into account when calculating contributions and benefits in qualified plans and certain other plans is $250,000 (up from $245,000 in 2011).
The maximum annual benefit you can receive from a defined benefit pension plan is limited to $200,000 in 2012, which is up from $195,000 in 2011.
And the maximum amount that can be allocated to your account in a defined contribution plan (for example, a 401(k) plan or profit-sharing plan) in 2012 is $50,000 which is up from $49,000 in 2011, plus age-50 catch-up contributions. This includes both your contributions and your employer's contributions. Special rules apply if your employer sponsors more than one retirement plan.
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Income phase-out range for determining deductibility of traditional IRA contributions in 2012
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1. Covered by an employer plan
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Single/head of household
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$58,000-$68,000 ($56,000-$66,000 for 2011)
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Married filing jointly
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$92,000-$112,000 ($90,000-$110,000 for 2011)
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Married filing separately
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$0-$10,000
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2. Not covered by an employer plan, but filing joint return with a spouse who is covered
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$173,000-$183,000 ($169,000-$179,000 for 2011)
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Income phase-out range for determining ability to fund Roth IRA in 2012 Single/head of household
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Single/head of household
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$110,000-$125,000 ($107,000-$122,000 for 2011)
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Married filing jointly
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$173,000-$183,000 ($169,000-$179,000 for 2011)
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Married filing separately
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$0-$10,000
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A number of retirement plan and IRA limits are indexed for inflation each year. Many of the limits have increased for 2012.