Invest

how to invest

Live

career, food, travel

Save

saving, credit, debt

Protect

insurance, security

Retire

401K, IRA, FI, Retire

Home » IRA's, Roth IRA, Taxes

2012 Traditional & Roth IRA Maximum Contribution Limits

Last updated by on 3 Comments

Update: the 2014 maximum IRA contribution and income limits have since been announced.

Last week, I reported the IRS announcement of the 2012 maximum 401K contribution limit increase. Right after, a few readers emailed me asking about the Roth IRA maximum contributions and income limits and whether or not they have also increased.

On the same day as the 401K announcement, the IRS also announced that the 2012 IRA contribution maximums and income limits.

The maximum IRA contribution did not increase, but the income limits did for both the Traditional IRA and Roth IRA. Here are the details…

2012 Maximum IRA Contribution

The 2012 IRA contribution maximums did not see a similar increase as 401K and other employer sponsored retirement plans, unfortunately.

They will remain the same as the 2010 and 2011 IRA maximum contribution limit at $5,000 for the 2012 tax year.

That’s three years in a row with no changes. I’d be really disappointed if there were no changes for 2013.

The 2012 Maximum IRA Catch-up Contribution

IRA income limitsFor those age 50 and over, the 2012 IRA catch-up contribution is still the same as 2010 and 2011 at an additional $1,000 over $5,000 ($6,000 total).

You begin to be eligible for the catch-up contribution if you turn 50 during any day in the calendar year.

Roth IRA Income Limits in 2012

IRA’s provide a great way to limit your tax liability in the present (Traditional IRA) and in the future (Roth IRA). There are, however, contribution phaseout limits based on your income that can limit how much you can contribute. The good news is that those limits (tied to inflation) will increase in 2012.

  • Married filing jointly or qualifying widow(er): If your modified gross adjusted income (MAGI) is $173,000 (up from $169,000 in 2011), you can contribute up to the $5,000 max. If at least $173,000 up to $183,000 (both up $4,000 over 2011), your contribution limit is phased out (see IRS publication 590). If $183,000 (up from $179,000) and above, you cannot contribute to a Roth IRA.
  • Single, head of household, or married filing separately and you did not live with your spouse at any time during the year: If under $110,000 (up from $107,000 in 2011), you can contribute up to the $5,000 maximum. If at least $110,000 up to $125,000 (was $122,000 in 2011), your contribution limit is phased out. If $125,000 and up, you cannot contribute to a Roth IRA.
  • Married filing separately and you lived with your spouse at any time during the year:If MAGI is between $0 and $10,000, your contribution limit will phase out. If $0, you can contribute up to the $5,000 maximum ($6,000 if over 50 years old). If $10,000 and above, you cannot contribute to a Roth IRA.

2012 Traditional IRA Income Limits

Traditional IRA income limits vary slightly from Roth IRA’s in that they are tied to whether or not you your employer sponsors a retirement plan for you.

If you do have a retirement plan with your employer:

  • Single or head of household: If your MAGI is $58,000 (up from $56,000) or less, you can take a full deduction. If more than $58,000, but less than $68,000 (up from $66,000) – you get a partial deduction. If over $68,000, you cannot take a deduction.
  • Married filing jointly or qualifying widow(er): If your MAGI is $92,000 (up from $90,000) or less, you can take a full deduction. If more than $92,000, but less than $112,000 (up from $110,000) – you get a partial deduction. If over $112,000, no deduction.
  • Married filing separately: If your MAGI is less than $10,000, you can take a partial deduction. If $10,000 or more, no deduction.

If you DO NOT have a retirement plan through an employer:

  • Single, head of household, or qualifying widow(er): Any MAGI permits a full deduction.
  • Married filing jointly or separately with a spouse who is not covered by a plan at work: Any MAGI permits a full deduction.
  • Married filing jointly with a spouse who is covered by a plan at work: If your MAGI is $169,000 or less, you can take a full deduction. If more than $173,000 (up from $169,000), but less than $183,000 (up from $179,000), you can take a partial deduction. If $183,000 or more, no deduction at all.
  • Married filing separately with a spouse who is covered by a plan at work: If your MAGI is less than $10,000, you can claim a partial deduction. If $10,000 or more, no deduction.

If you have not yet started a Roth or Traditional IRA, I house both of mine at TradeKing because there are no account maintenance or inactivity fees, trades are only $4.95, and their customer service is great.

Happy contributing!


About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


3 Comments »
SPEAK YOUR MIND

Enter your:


Home | Sitemap | Terms | © 20somethingfinance.com