2011 pension contribution amounts stay at 2010 levels thanks to low inflation rate
Saturday, January 29, 2011
If the weekend break from your usual 9-to-5 grind has you thinking about your eventual retirement, you need to be putting as much as you can into your IRA and workplace retirement account now.
Contributing to a traditional IRA is one of the few tax breaks still available for the previous tax year. You can contribute up to $5,000 to a traditional IRA by April 18 (remember, we get three extra filing days this year) and have it count as a deduction, if you're eligible for the write off, on your 2010 tax return.
If you're age 50 or older, you're allowed a $1,000 catch-up contribution, meaning you can put $6,000 in your traditional IRA by the filing deadline and possibly deduct your contribution amount.
The same limits, but without the deduction option, are available by the April 18 deadline for Roth IRAs, too.
To ensure a comfortable retirement, you should be putting in as much as you're allowed by the tax code, or as much as you can afford without disrupting your daily budget needs, each year.
So max out your 2010 contribution amount and then get to adding to your IRA for the 2011 tax year.
Little change in 2011 retirement limits: You don't have to do much figuring for 2011 contributions. The low rate of inflation has kept the contribution levels flat.
The same $5,000 and $6,000 contribution amounts are in place for 2011.
If you participate in your workplace plan, your deduction for a traditional IRA contribution is phased out if you make between certain levels of income.
For singles and heads of household, the triggering modified adjusted gross income (MAGI) is between $56,000 and $66,000, unchanged from 2010.
For married couples filing jointly and where the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range in 2011 is $90,000 to $110,000, up from last year's $89,000 to $109,000.
For an IRA contributor who 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 in 2011 if the couple's income is between $169,000 and $179,000, up from 2010's $167,000 to $177,000 range.
The income phase-out range for taxpayers making contributions to a Roth IRA in 2011 is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010.
For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000.
And for a husband or wife filing a separate return and who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
Have your eyes glazed over yet from reading all these numbers? Maybe a visual representation would work better.
Have another cup of coffee and check out the tables below, put together by the folks at E*Trade financial services.
| Year | Maximum Contri- bution (if under age 50) |
Maximum Contri- bution (if over age 50) |
Contribution Deadline | Limits on Tax Deductibility | |
| 2010 | $5,000 | $6,000 | 4/18/2011 | Neither You or Your Spouse in Employer Plan - Contribution is Fully Tax Deductible | |
| You're in an Employer Plan | |||||
| Single | $56,000-$66,000 | ||||
| Married- Filing Jointly | $89,000-$109,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
| Only Your Spouse in an Employer Plan | |||||
| Married- Filing Jointly | $167,000-$177,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
| 2011 | $5,000 | $6,000 | 4/16/2012 | Neither You or Your Spouse in Employer Plan - Contribution is Fully Tax Deductible | |
| You're in an Employer Plan | |||||
| Single | $56,000-$66,000 | ||||
| Married- Filing Jointly | $90,000-$110,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
| Only Your Spouse in an Employer Plan | |||||
| Married- Filing Jointly | $169,000-$179,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
| Year | Maximum Contri- bution (if under age 50) |
Maximum Contri- bution (if over age 50) |
Contribution Deadline | Income Limits for Contributions | |
| 2010 | $5,000 | $6,000 | 4/18/2011 | Tax Filing Status | Income |
| Single | $105,000-$120,000 | ||||
| Married- Filing Jointly | $167,000-$177,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
| 2011 | $5,000 | $6,000 | 4/16/2012 | Tax Filing Status | Income |
| Single | $107,000-$122,000 | ||||
| Married- Filing Jointly | $169,000-$179,000 | ||||
| Married- Filing Separately | $0-$10,000 | ||||
Contribution Amounts and Deadlines
| Year | Maximum Contribution | Contribution Deadline |
| 2010 | $49,000 | 4/18/2011 (plus extensions) |
| 2011 | $49,000 | 4/16/2012 (plus extensions) |
| Year | Maximum Contribution (if under age 50) |
Maximum Contribution (if over age 50) |
Contribution Deadline |
| 2010 | $11,500 | $14,000 | 4/18/2011 (plus extensions) |
| 2011 | $11,500 | $14,000 | 4/16/2012 (plus extensions) |
Contribution Amounts and Deadlines
| Year | Maximum Salary Deferral (if under age 50) |
Maximum Salary Deferral (if over age 50) |
Contribution Deadline |
| 2010 | $16,500 | $22,000 | 4/18/2011 (plus extensions) |
| 2011 | $16,500 | $22,000 | 4/16/2012 (plus extensions) |
| Year | Maximum Contribution (if under age 50) |
Maximum Contribution (if over age 50) |
Contribution Deadline |
| 2010 | $49,000 | $54,500 | 4/18/2011 (plus extensions) |
| 2011 | $49,000 | $54,500 | 4/16/2012 (plus extensions) |
Again, remember that for 2010 IRA contributions, either Roth or traditional, your contribution can be made as late as April 18. If you're writing a check and mailing it to your IRA manager, the envelope must be postmarked by April 18.
And remember to make it clear that it's for the 2010 tax year, especially if you're claiming a deduction for the contribution.
Small business retirement plan contributors have a bit of leeway.
If you get an extension to file your tax return, you can put money for the previous tax year into your retirement account as late as the extension deadline, which this year is Oct. 17.
Related posts:
- Getting your rocking chairs on the same porch
- Get ready to retire
- Contribute to your retirement accounts
- Roth IRAs and your retirement income
- Handy retirement plan rollover chart
- 401(k) Do's and Don'ts
- Year-end money moves: Retirement
- Retirement plan deadlines redux
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Good News for extension filers for 2010 taxes. Extension date is 18th April 2011.
Posted by: Tax Extension 2010 | Wednesday, February 02, 2011 at 11:45 PM