401(k) and Roth IRA Limits for 2012

Today, the IRA made an exciting announcement: IRS Announces Pension Plan Limitations for 2012!

I am excited about this announcement for two reasons:

  1. They increased the 401(k) and 403(b) contribution limit from $16,500 to $17,000, which means that I will have $500 more of tax-deferred contribution room in 2012.
  2. They increased the AGI phase-out range for single taxpayers making contributions to a Roth IRA to $110,000 to $125,000 (a shift of $3,000).
  3. Combining these two, my non-adjusted income phase-out range for making contributions to a Roth IRA is $127,000 to $142,000 in 2012.

Based on my projected non-adjusted gross income for 2012, I will be able to make at least some contribution to a Roth IRA. I think I still need to wait until at least July before I make any contributions, but I do at least have that extra $500 of 401(k) contributions and an additional $3,000 of income room that I hadn’t anticipated.

My plan after much deliberation is to keep my funds earmarked for the Roth IRA contribution in my taxable money market fund until I know if I can contribute or not. Then I’ll move what’s eligible for a Roth IRA into it and the rest into a fund in my taxable account, likely the Total International Stock Index.

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