The Internal Revenue Service (IRS) has announced cost of
living adjustments affecting dollar limitations for pension plans and other retirement-related
items for 2011 tax year. By and large, the limits will either be unchanged, or
the inflation adjustments for 2011 will be small.
Among the highlights:
- The contribution limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government's Thrift Savings Plan remains the same at $16,500.
- The catch-up contribution limit under those plans for those aged 50 and over is 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 active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000 -- unchanged from 2010.
- For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000 -- up from $89,000 to $109,000.
- For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple's income is between $169,000 and $179,000 - an increase of $2,000 in both instances.
The AGI phase-out range for taxpayers making contributions
to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up
from $167,000 to $177,000 in 2010. For singles and heads of household, the
income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000.
For a married individual filing a separate return who is an active participant
in an employer-sponsored retirement plan, the phase-out range remains $0 to
The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.