Retirement by the Numbers: Employer Plans, IRAs and the Saver's Credit

No COLA Means Little Changes in Contribution Amounts for Most 2011 Retirement Vehicles

Both IRA contribution levels and contribution limits to employer-sponsored programs are subject to cost of living adjustments (COLAs). However, with no COLA change, the contributions remain the same for 2010 and 2011.

Allowable adjusted gross income parameters for traditional deductible IRAs for married couples filing jointly and for taxpayers making Roth IRA contributions will rise for 2011. Changes also are made to 2011 income thresholds under the Saver’s Credit, which is a nonrefundable tax credit that allows lower- and middle-income retirement plan participants to use elective contributions to reduce their federal income tax on a dollar-for-dollar basis.

Employer-sponsored Programs
Retirement Vehicle	Maximum 2011 Employee Contribution*	Catch-up Contributions
401(k), 457 and 403(b) plans	$16,500 – pre-tax dollars (same for 2010)	$5,500 (same for 2010)
Roth 401(k) and 403(b) plans	$16,500 – after-tax dollars (same for 2010)	$5,500 (same for 2010)
SIMPLE plans	$11,500 – pre-tax dollars (same for 2010)	$2,500 (same for 2010)
SARSEP** (Salary Reduction SEP)	$16,500 – pre-tax dollars (same for 2010)	$5,500 (same for 2010)

IRAs***
Retirement Vehicle	2011 Maximum Contribution Limits*	Catch-up Contributions	Adjusted Gross Income (AGI) Restrictions
Traditional Deductible IRA	$5,000 (same for 2010)	$1,000 (same for 2010)	For active participants in employer provided plan: *Single filers:* under $56,000 phasing out completely at $66,000 (same for 2010) *Married, filing jointly:* under $90,000 phasing out completely at $110,000 (under $89,000 phasing out completely at $109,000 for 2010)
Traditional Nondeductible IRA	$5,000 (same for 2010)	$1,000 (same for 2010)	N/A
Roth IRA Nondeductible	$5,000 (same for 2010)	$1,000 (same for 2010)	*Single filers:* under $107,000 phasing out completely at $122,000 (under $105,000 phasing out completely at $120,000 for 2010) *Married, filing jointly:* under $169,000 phasing out completely at $179,000 (under $167,000 phasing out completely at $177,000 for 2010)

* Subject to COLAs.

** SARSEPs must have been established prior to January 1, 1997. The maximum contribution and catch-up amounts are the same as for 401(k), 457 and 403(b) plans.

*** Individuals have until April 18, 2011, to make contributions to their IRAs for 2010.

Saver’s Credit****

Retirement
Vehicle

2011 Maximum Credit

Adjusted Gross
Income (AGI) Restrictions

IRAs, Roth IRAs, SIMPLE Plans, 401(k)s and other qualified retirement plans

$1,000 for single filers

$2,000 for joint filers

Single filers: $28,250 or less ($27,750 for 2010)

Head of household filers: $42,375 or less ($41,625 for 2010)

Married, filing jointly: $56,500 or less ($55,500 for 2010)

**** Depending on AGI, the credit ranges from 10% to 50% with lower income taxpayers being eligible for a higher credit. For example, a married taxpayer filing jointly with an AGI of $34,000 or less making a $2,000 retirement plan contribution in 2011 could be eligible for a 50% credit, or $1,000. By contrast, if that same taxpayer had an AGI between $34,001 and $36,500, she would be eligible for a 20% credit, or $400; an AGI between $36,501 and $56,500 would make that same taxpayer eligible for a 10% credit, or $200.

SOURCE: CCH, 2011

Permission for use granted.

nb-11-27