For the second year in a row, the Internal Revenue Service has announced that there will be no change to the maximum allowable contributions to pension plans or to individual retirement accounts in 2011.
Here are the limits that will remain the same in 2011:
The annual limit for employee contributions to a 401(k), 403(b), or to a 457 deferred compensation plan, remains at $16,500 – the same amount that was allowed for 2010 and 2009.
The additional “catch-up” amount for individuals who will be 50 or older at the end of the year also will remain at $5,500. They will be able to contribute a maximum of $22,000 to their employer’s plan next year.
The most you can contribute to an IRA will remain $5,000, or $6,000 for those who will be 50 at the end of the year.
The maximum contribution for Keogh plans and simplified employee pension plans will also remain stable at $49,000.
The maximum contribution to a savings incentive match plan for employees of small employers (SIMPLE) remains at $11,500, and the minimum compensation for required participation in an SEP plan is unchanged at $550. The maximum contribution to a defined benefit plan is still $195,000.
For those of you with both an IRA and an employer-sponsored plan, the IRS has made some small adjustments.
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 2011 income phase-out range is an adjusted gross income of $90,000 to $110,000, up from last year’s range of $89,000 to $109,000.
If one spouse is an active participant in an employer plan but the other spouse is not, the phase-out range for contributions to the plan of the non-participating spouse is now an AGI between $169,000 and $179,000, up from $167,000 and $177,000 this year.
The 2011 AGI phase-out range for taxpayers making contributions to a Roth IRA is $107,000 to $122,000, up from $105,000 to $120,000, and $169,000 to 179,000, up from $167,000 to $177,000, for a married couple filing a joint return. For a married individual filing a separate return, the phase-out range remains $0 to $10,000.
The IRS has promised to provide guidance on the cost of living adjustments for the standard deduction, personal exemption amount, child tax credit, Hope scholarship and lifetime learning credits, earned income credit, and other items, which are usually announced at the same time as the pension cost of living adjustments, “in the future.”
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