Friday, November 18, 2011
How Much Can You Save in Your Retirement Plan in 2012?
8:16 AM | 
Posted by
pensionfinancialservices |
If you wisely decide to save more for retirement in 2012, federal tax rules are in your favor because the ceiling on employee contributions has risen a bit.
The IRS has raised the limit on tax-deferred contributions to 401(k) accounts to $17,000 in 2012, up from $16,500 in 2011 --- because of inflation.
The limit on so-called catch-up contributions is not changing. If you reach age 50 or older in 2012 (and if your employer’s plan allows catch-up contributions), you can contribute an extra $5,500- for a total maximum contribution of $22,500 in 2012.
IRA contribution limits are unchanged.
Summed up: 2012 Employer Plan & Contribution Limits are:
· $17,000 for 401(k) and 403(b)
· $22,500 for 401(k) and 403(b) with catch-up contributions
· $5,000 for Traditional and Roth IRA
· $6,000 for Traditional and Roth IRA with catch-up contributions
(Note: Catch-up contributions are allowed for those born on or before December 31, 1962).
SAVE A LITTLE ON YOUR PLAN: SEE A BIG DIFFERENCE
It is estimated that very few people take advantage of the opportunity to save by utilizing the full limitations of their plans. If it’s at all possible, consider how your funds grow over time. Try a few scenarios on our 401(k)Savings Calculator on our website.
If you can save 12-15% of your pay for retirement, including the possible matching contributions that your employer may be offering, it will make a huge impact in the long-term.
While the 12% may sound like “too much to save” right now, why not increase your contributions by one or two percentage points at a time. If you saved 6% of your pay by directing it to your 401(k) last year, raise that to 8% in 2012 and 10% in 2013.
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