Retirement Plan Limits for 2011 and 2012

• Solo 401(k)
• SEP IRA
• SIMPLE IRA
• Age-Weighted Plan
• New Comparability Plan
• Safe Harbor 401(k)
• New Comparability Profit Sharing Plan with a Safe Harbor 401(k)
• Profit Sharing Plan
• 401(k) Plan
• Roth 401(k)
• Traditional IRA
• Roth IRA
• Additional Information

Solo 401(k)

Annual contributions

All contributions are discretionary. Compensation is earned income for self-employed individuals or unincorporated businesses.

• Employees can defer up to the lesser of 100% of eligible compensation or $16,500 ($22,000 if 50 or older) in 2011 and $17,000 ($22,500 if 50 and older) in 2012.
• The profit sharing contribution cannot exceed 25% of eligible compensation. Compensation over $245,000 in 2011 and over $250,000 in 2012 is not considered eligible.
• Combined contributions (both salary deferrals and profit sharing) cannot exceed the lesser of 100% of compensation or $49,000 in 2011 and over $50,000 in 2012.
• Additional catch-up contributions of up to $5,500 in 2011 and 2012 are available for those 50 or older.

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SEP IRA

Annual contributions

Eligible employees may be restricted to those who are 21 or older, worked for their current employer during at least three of the preceding five years and earned at least $550 in 2011 and 2012.

Employers contribute up to the lesser of 25% of an employee's eligible compensation or $49,000 in 2011 ($50,000 in 2012). Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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SIMPLE IRA

Annual contributions

• Employee and employer contribute.
• Employees can defer compensation up to 100% of their salary or $11,500 ($14,000 if 50 or older) in 2011 and 2012.
• Employer must choose one of two options:
  • Match employee's contribution dollar for dollar, up to 3% of compensation (not exceeding the deferral limit). In two years of any five year period, the match can be reduced to 1% of compensation.
  • Contribute 2% of each eligible employee's compensation. Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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Age-Weighted Plan

Annual contributions

• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Total deductible contribution cannot exceed 25% of total eligible compensation.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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New Comparability Plan

Annual contributions

• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Total deductible contribution cannot exceed 25% of total eligible compensation.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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Safe Harbor 401(k)

Annual contributions

• Employees can defer up to the lesser of 100% of eligible compensation or $16,500 ($22,000 if 50 or older) in 2011 and $17,000 ($22,500 if 50 or older) in 2012.
• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Total deductible contribution cannot exceed 25% of total eligible payroll. Catch-up deferrals are not included in this limit.
• Total deductible employer contributions to the plan cannot exceed 25% of total eligible compensation. Employer contributions do not include employee deferrals.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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New Comparability Profit Sharing Plan with a Safe Harbor 401(k)

Annual contributions

• Employees can defer up to the lesser of 100% of eligible compensation or $16,500 ($22,000 if 50 or older) in 2011 and $17,000 ($22,500 if 50 or older) in 2012.
• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Total deductible contribution cannot exceed 25% of total eligible compensation. Catch-up deferrals are not included in this limit.
• Total deductible employer contributions to the plan cannot exceed 25% of total eligible payroll. Employer contributions do not include employee deferrals.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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Profit Sharing Plan

Annual contributions

• The employer contributes up to the lesser of 100% of eligible compensation or $49,000 per employee in 2011 ($50,000 in 2012). Total employer contribution cannot exceed 25% of total eligible payroll.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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401(k) Plan

Annual contributions

• Employees can defer up to the lesser of 100% of eligible compensation or $16,500 ($22,000 if 50 or older) in 2011 and $17,000 ($22,500 if 50 or older) in 2012.
• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Catch-up deferrals are not included in this limit.
• Total deductible employer contributions to the plan cannot exceed 25% of total eligible compensation. Employer contributions do not include employee deferrals.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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Roth 401(k)

Annual contributions

• Employees can defer up to the lesser of 100% of eligible compensation or $16,500 ($22,000 if 50 or older) in 2011 and $17,000 ($22,500 if 50 or older) in 2012.
• Deferrals and employer contributions cannot exceed the lesser of 100% of each employee's compensation or $49,000 per employee in 2011 ($50,000 in 2012). Catch-up deferrals are not included in this limit.
• Total deductible employer contributions to the plan cannot exceed 25% of total eligible compensation. Employer contributions do not include employee deferrals.
• Compensation over $245,000 in 2011 ($250,000 in 2012) is not considered eligible.

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Traditional IRA

Annual contributions

• The annual contribution limit is $5,000 ($6,000 if 50 or older) for 2010 and 2011. Contributions to a Roth IRA and a traditional IRA in aggregate cannot exceed the annual limit.
• Contributions must be made by April 15 to be considered a prior-calendar-year contribution.

Tax deductions

The tables below show the deduction limits for active participants in qualified plans for 2011 and 2012.^1 2

2011

2012

¹ Individuals filing a single return and NOT covered by a retirement plan at work may deduct the full contribution amount with no modified AGI restrictions. For married couples filing jointly, if both taxpayers are NOT covered by a retirement plan at work, the full contribution amount is deductible with no modified AGI restrictions. For married couples filing jointly where the IRA contributor 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 $173,000 and $183,000 in 2012, up from $169,000 and $179,000 in 2011.

² After age 70 ½, a person is no longer eligible to contribute to a traditional IRA.

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Roth IRA

Annual contributions

• Annual limit: $5,000 ($6,000 if 50 or older) for 2011 and 2012. Contributions to a Roth IRA and a traditional IRA in aggregate cannot exceed the annual limit.
• Single filers with a modified adjusted gross income of more than $122,000 in 2011 ($125,000 in 2012) and married couples filing jointly with a combined income that exceeds $179,000 in 2011 ($183,000 in 2012) are not eligible to contribute to a Roth IRA.
• Contributions must be made by April 15 to be considered a prior-calendar-year contribution.

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Additional Information

Available tax credits

Tax credits are available for eligible low- and middle-income savers who make contributions to a qualified IRA, 401(k) and certain other retirement plans. The maximum annual contribution eligible for the credit is $1,000 ($2,000 if filing jointly). Taxable retirement plan distributions received by the employee or the employee's spouse may reduce the credit. This credit is not available to individuals who are under 18, full-time students or dependents claimed on another tax return.

2012

2011

The credit percentage rate ranges from 0% to 50% and depends on the adjusted gross income (AGI) and tax filing status of the taxpayer.

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All retirement plan limits are indexed annually for inflation. This information does not constitute tax advice. Please consult your tax advisor about your particular situation.