2012 New IRA Contribution Rules

Each year the IRS adjust the rules and limits for IRA’s, 2012 is no different. For any individual who holds an IRA staying up to date on the rules is crucial. Not knowing the rules can result large fines, penalties, and possible the loss of the IRA tax shelter benefits.

For Traditional IRA’s in 2012 nothing has really changed. Contribution limits continue to be $5,000 for individuals under 50 and a $6,000 for individuals over the age of 50. Individuals over the age of 50 are allowed to contribute an extra $1,000 as a ‘catch-up’ contribution because they are closer to retirement age.

For Roth IRA’s the contribution limits for 2012 have stayed the same as they were in 2011. For individuals under the age of 50 the contribution limit is $5,000 and for those over the age of 50 it is $6,000. For those individuals who have both Traditional and Roth IRA the maximum contribution amount can be split amongst the two. They do not need to be split equally between the IRA’s but they cannot exceed an individual’s maximum contribution limit.

The Roth IRA Income contribution limits have changed for 2012. The income limits have gone up allowing for more individuals to qualify to make contributions to Roth IRA’s. For single, heads of households or married filing separately 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 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.

For SEP IRA’s the contribution limits have stayed the same as they were in 2012. The maximum contribution limit for a self-employed individual is 25% of their salary of $50,000 whichever is smaller. Also for SEP IRA’s there is no catch up contribution amount for individuals over the age of 50.

For SIMPLE IRA’s much like SEP IRA’s the contribution limits have not changed in 2012. The maximum contribution for an individual is $11,500 with a catch up contribution amount of $2,500 for individuals over the age of 50.

To learn more about the different types of IRA’s and their rules and guidelines please contact Advanta IRA Trust at 239.333.1031. Or go to advantatrust.com, there you can learn about IRA’s through articles, blogs, or webinars.

Advanta IRA does not sell any products, or give any investment advice. Advanta IRA provides clients with education and the tools to make educated investment decisions.