Max Out Your Retirement in 2012

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Make a New Years Resolution to max out your retirement savings this year!  Every year, there are always slight changes in what you can contribute, so here are the 2012 guidelines, as published by the IRS.

Employer Sponsored Plans

In 2012, the IRS has released some slightly higher contribution limits for employer sponsored plans.  For 401(k), 403(b), most 457 plans, and the government's Thrift Savings Plan, the maximum contribution has increased to $17,000.  That is $500 higher than 2011.  Once again, if you are over 50, you can make catch-up contributions of up to $5,500 for the year, which is the same as 2011.

If you've been contributing the max each year, make sure that you raise it a little to get the full max this year.  If you are paid bi-weekly, that is only an extra $19.23 per paycheck.  Hardly noticeable!

Individual Retirement Accounts

For 2012, the maximum IRA contribution remains the same at $5,000 if you are under 50, and $6,000 if you are over 50.  However, eligibility income limits has increased this year for both Traditional IRAs and Roth IRAs.

For Traditional IRAs, you can deduct your contributions if you participate in a workplace retirement plan if you make up to $58,000, or partially deduct your contribution if you make up to $68,000.  This is an increase of $2,000 at each limit.

For Roth IRAs, you can make the maximum contribution if you make less than $110,000 in 2012, or a partial contribution if your income is less than $125,000.  If you're married, the maximum adjusted gross income is $173,000 if you're filing jointly.

The Savers Tax Credit

Another benefit that returns this year is the Savers Tax Credit.  If you make less than $28,750 for singles and $57,500 for married filed jointly, you can receive a tax credit up to a maximum of $1,000 (or $2,000 for couples).  It ranges from 10% to 50% of your contribution up to the maximum, and disappears entirely above the thresholds listed.

Readers, do you plan on increasing your retirement contributions this year?

Max Out Your Retirement in 2012 is a post from: The College Investor. Please check out the site at http://thecollegeinvestor.com or follow him on Twitter @CollegeInvestin. Thanks!

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1. Are You Prepared For Retirement?
2. The Ultimate Roth 401(k) Guide
3. The Government Pays YOU To Save!