Retirement Contribution Limits changing in 2012

[kork13]

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The writer puts it well -- good and bad news for retirement savers:

GOOD: Starting next year, the 401k/403b/TSP contribution limit will be $17,000 (still +$5,500 for 50+ y/o), and income limits/phase-outs for IRA contributions all increased by a few thousand dollars.

BAD (or at least less good): They're being raised because the level of inflation has inched up enough to trigger the change.


I only wish they would unilaterally raise the Roth/Traditional IRA contribution limits (beyond the automatic inflation increases). It'd be nice if they would, I don't know, perhaps double the limit to $10k/yr. But that's pipe dreams...

[disneysteve]

Originally Posted by kork13

I only wish they would unilaterally raise the Roth/Traditional IRA contribution limits (beyond the automatic inflation increases). It'd be nice if they would, I don't know, perhaps double the limit to $10k/yr. But that's pipe dreams...

It is funny that you posted this today. I was just wondering if the Roth limit would go up for 2012. They did index it to inflation a few years ago but I think it can only rise in $500 increments. I was hoping we'd at least get that but I guess not.

It is ridiculous that the limit is so low. Only about 45% of Americans have access to a 401k plan. More than half of us, myself included, do not, so the Roth is our only tax-advantaged retirement plan. The fact that one allows $16,500 and the other only allows $5,000 never sat well with me. Of course, at least they finally upped the limit which had stood at $2,000 for about 20 years. I would love to see them up it to match the 401k amount.

[GREENBACK]

Originally Posted by disneysteve

I would love to see them up it to match the 401k amount.

I'm sure you're well aware that no politician will ever raise it to that amount as long as it's after tax dollars. No way they're losing out on that revenue stream.

[jpg7n16]

I think it's more about the incentive for the employer to offer a qualified plan. There's less incentive if the IRA limit and rules are exactly the same.

[bjl584]

No increase for the ROTH IRA in 2012. My broker and I just had this conversation the other day. I'd like to see it increased to reflect the limits of a 401K, but one can dream I guess.