The Internal Revenue Service (IRB-2011-103) announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2012. Some of the limitation changes are detailed below, other applicable pension plan limitations can be viewed on our website’s Contributions & Allowance tab for 2012. For additional information and retirement planning assistance, please contact our office.

Changed Limitations:

• The elective deferral (contribution) limit for employees participating in 401(k), 403(b), most
457 plans and the federal government’s Thrift Savings Plan increases from $16,500 to 17,000.
The catch-up contribution for taxpayers aged 50 or older remains unchanged at $5,500.

• The deduction for taxpayers making contributions to a Traditional IRA is phased out for married couples filing jointly (MFJ) who have a modified adjusted gross income (MAGI) between $92,000 to $112,000, where the spouse making the IRA contributions is covered by a workplace retirement plan. For singles and heads of household who are covered by a workplace retirement plan, the MAGI phase-out range is from $58,000 to $68,000. For a taxpayer who is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI deduction phase-out range is between $173,000 to $183,000.

• The adjusted gross income (AGI) phase-out range for married couples filing jointly making contributions to a Roth IRA is $173,000 to $183,000 for 2012. For singles and heads of household the phase-out range is $110,000 to $125,000. For a married taxpayer who is filing a separate return and covered by a workplace retirement plan the phase-out range remains $0 to $10,000.

• The AGI limit for the retirement savings contribution credit (saver’s credit) is $57,500 for married couples filing jointly; $43,125 for heads of household; and $28,750 for singles and married individuals filing separately.

• The annual compensation limit under Sections 401(a)(17), 404(I), 408(k)(3)(C) and 408(k)(6)(D)(ii) increases to $250,000.

• The limitation for defined contribution plans under Section (415(c)(1)(A) increases in 2012 to $50,000.