Your Pension Plan - Inflation Adjustments for 2012

For 2012, there are a few cost of living adjustments for pension plans and other retirement-related items. Check out what to expect in the new year....

• The contribution limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government's Thrift Savings Plan, increases to $17,000 in 2012, from $16,500 in prior years.
  
• The catch-up contribution limit in those plans for those aged 50 and over remains unchanged, at $5,500.
  
• IRA contributions and catch up limits remain unchanged for 2012 at $5,000 and $1,000 respectively. 

• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000-$66,000 in 2011.
  
  
• For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $92,000 to $112,000, up from $90,000 to $110,000.
  
  For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple's income is between $173,000 and $183,000 in 2012, up from $169,000 and $179,000 in 2011.
  
• The AGI phase-out range for taxpayers 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 an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
  
• The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $57,500 for married couples filing jointly, up from $56,500 in 2011; $43,125 for heads of household, up from $42,375; and $28,750 for married individuals filing separately and for singles, up from $28,250.

Call our office if you want to discuss your pension plan. We're happy to help.

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212         33530 1st Way S, Suite 102

Everett, WA 98201                          Federal Way, WA 98003

425.339.2400                                  253.237.0751

fax 425.259.1099                            fax 253.237.0701

www.securitytaxservices.com