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Income Limits Upped for IRAs

For those who plan to contribute to an IRA in 2012, the income qualifications are slightly more lax than they were last year.

On Thursday, the IRS announced its new income limitations for contributing to IRAs in 2012. These guidelines are outlined below.

For traditional IRAs, these include:

  • For people who are covered by a workplace retirement plan, the deduction for contributing to a traditional IRA is phased out when you have a modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and $66,000 in 2011. If you make more than $68,000, your contributions aren’t tax-deductible; if you fall within that range, they’re only partially tax-deductible; and if you fall below that range, you’ll get the full tax deduction. Remember, there are no income restrictions to contributing to the account, you just won’t get the tax deduction if you’re not within the income range specified above. If you aren’t sure about your modified AGI, use this calculator.
  • 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 someone 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 and $183,000, up from $169,000 and $179,000.

For Roth IRAs, these include:

  • The AGI phase-out range for 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.

For a detailed list of these new pension plan limits for 2012, click here.


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    • To cover the government shortfall of income, tax rates will have to go up. 401K is not a good idea anymore. Save after tax money. Pay tax now. Tax is on sale. You never know what the tax rates will be by the time you retire. Government can find other ways to confiscate your retirement savings as well! Read about what to do with your pension plan here.

      The root cause of the crash is excessive debt. Entire nation cannot borrow non-stop, inflate the money supply and prices with borrowed money and then hope that all will be fine when the pay back time arrives.

    • It is great to hear that the maximum has been increased to $17K! With the cost of health care skyrocketing I am sure we will need the extra money to cover health costs in retirement. My wife and I try to max out our 401k’s every year. My wife is self employed and has a special kind of 401k called a “Individual 401K” that allows her save up to $49,000 a year on a pre-tax basis! Here is overview of how it works: http://networthprotect.com/2011/10/21/solo-401k-a-great-equalizer-plus-my-favorite-posts-of-the-week/

    • dsfsf

    • This is an excellent summary of the IRA contribution and phaseout limits. It would be nice to see something similar for retirement plan limit increases. I may put one at http://www.agbaygroup.com
      Anthony Agbay, The Agbay Group

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.