2012 IRA Contribution Limits
Since based on the IRA rules, the contribution limits for the Individual Retirement Accounts are being updated every year based on the cost-of-living changes, it is essential you to be aware of and stay updated with the current IRA contribution rules and limits so that you can get the most out of your IRA.
This year 2012, there are revised contribution limits for Traditional IRA, Roth IRA, SIMPLE IRA, and SEP IRA. The account holders of each type of IRA plan must be aware of such changes. We will discuss further the updated contribution limits for both Roth and Traditional IRA.
2012 Traditional IRA Contribution Limits
For Traditional IRA, the same maximum IRA contribution limits 2012 are applied as with the year 2011. Individuals are allowed to make contributions equal to the amount of their compensation, but not to exceed $5000. This is the standard contribution limit and is applicable for those individuals who are below the age of 50 years. For those people who are 50 years or older, the maximum contribution limit is $6000 — this is referred to as “catch-up” contribution, and is applicable for those people who belong to such age group which allows them to contribute higher amount because they are nearing their retirement.
2012 Roth IRA Contribution Limits
Just like the traditional IRA, the maximum Roth IRA contribution limits 2012 are still the same as with the previous year. The standard contribution remains at $5000 maximum, and this is applicable to those individuals who are below the age of 50. The catch-up contribution, which is applicable to those people who are 50 years or older, are allowed to make a maximum contribution of $6000.
Those individuals who have two IRAs, one is a Traditional IRA and the other is Roth, such individuals can split the maximum contribution limits to each of these accounts. So if a person is below the age of 50, he can split his maximum annual contribution limit of $5000 to each of these IRAs. The contribution does not need to be divided equally, though.
Roth IRA Income Limits
One of the most essential requirement for individuals to be eligible to contribute to a Roth IRA is the Roth IRA income limits based on their tax-filing status. For year 2012, the maximum income limits are increased, thus, many more individuals will be qualified to make Roth IRA contributions.
For single, heads of households, or married filing separately as long as spouses do not live together with AGI of between $110,000 to $125,000, Roth contributions are reduced or phased out. They are no longer eligible to make contributions if their income exceeds $125,000.
For joint filers, or qualified widows/widowers with AGI of between $173,000 up to $183,000, Roth contributions are phased out, and they are no longer qualified to make contributions if their AGI exceeds $183,000.
For married filing separately, but couples still live together, with AGI of less than $10,000, Roth contributions are phased out, and they are no longer eligible to make Roth contributions if their income exceeds $10,000.