Fri, October 21, 2011
In response to increases in the cost-of-living index, the IRS announced today that adjustments that will be made to contribution limits for some types of retirement plans.
For 401(k), 403(b), 457 plans, and the Federal Thrift Savings Plan, the employee contribution limit will be increased from $16,500 to $17,000. The catch-up contribution limit for employees who are 50 or older remains at $5,500. However, Individual Retirement Arrangement (IRA) contribution limits remain unchanged at $5,000 (with a catch-up contribution limit of $1,000).
Cost-of-living increases also affect the income levels at which IRA contributions are reduced. For single filers covered by a workplace retirement plan, traditional IRA contributions begin to be phased out at a modified adjusted gross income (MAGI) of $58,000, up from $56,000.
For married couples filing jointly, the limit depends on whether the spouse making the IRA contribution is covered by a workplace retirement plan. If so, the phase-out starts at a MAGI of $92,000; if the contributing spouse does not have a workplace plan but is married to someone who does, phase-outs start at a MAGI of $173,000.
Roth IRA contribution income level limits have also increased, with the phase-out starting at a MAGI of $110,000 (up from $107,000) for singles and $173,000 (up from $169,000) for married couples filing jointly.