From Carol McAtee’s CPA firm in St. Petersburg, FL – Cost of living adjustments affecting the limitations of contributions to retirement related plans for the tax year 2011 have been announced by the IRS. In general, the inflation adjustments for 2011 will be small and some limits are unchanged.
The contribution limit for section 401(k), 403(b), or 457(b) plans remains unchanged at $16,500. The catch-up contribution limit for these plans for those aged 50 and over remains unchanged at $5,500.
For taxpayers making contributions to traditional IRA plans, the phase-out range for making deductable contributions remains unchanged for single and head of household filers at the income level of between $56,000 and $66,000. For married couples filing jointly, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000 in 2010, if the spouse who makes the IRA contribution is a participant in an employer plan. If the spouse making the IRA contribution is not an active participant in an employer plan and is married to someone who is an active participant, the deduction is phased out for income levels between $169,000 and $179,000, up from $167,000 and $177,000.
The income 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 single and head of household filers, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. The phase-out range remains from $0 to $10,000 for a married individual filing a separate return who is an active participant in an employer retirement plan.
The income limit for the saver’s tax credit for low and moderate income workers is up slightly in 2011 to $56,500 for married couples filing jointly, $42,375 for heads of household, and $28,500 for single filers and married individuals filing separately.
The income limits for contributions discussed above apply to Adjusted Gross Income (AGI), not gross income. Certain deductions are required before measuring your eligibility for retirement plan contributions.
As tax professionals, McAtee & Associates can help taxpayers with all their tax matters. Contact us for assistance in all of your financial and tax matters.
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