In general, many of the
pension plan limitations will change for 2012 because the increase in the
cost-of-living index met the statutory thresholds that trigger their
adjustment. However, other limitations will remain unchanged.
Highlights of the COLAs
• The elective deferral (contribution) limit
for employees who participate in 401(k), 403(b), most 457 plans, and the
federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
• The catch-up contribution limit for those
aged 50 and over remains unchanged at $5,500.
• The deduction for taxpayers making
contributions to a traditional IRA is phased out for singles and heads of
household who are covered by a workplace retirement plan and have modified
adjusted gross incomes (AGI) between $58,000 and $68,000, up from $56,000 and
$66,000 in 2011. 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 an IRA contributor 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.