New 401k Contribution Limit for 2012!

Good news for savers who favor tax advantaged accounts! It has been announced that the maximum 401(k) contribution will rise to $17,000 in 2012, up $500 from the $16,500 limit which has been in place for years. In addition, individuals born before 1963 can put in an extra $5,500 - as much as $22,500.

The limits for IRAs and Roth IRAs will remain $5,000, in addition to a $1,000 "catch-up contribution" allowed for anyone who was born in 1962 or earlier.

Other Retirement Plan highlights for 2012:

The new 401k contribution limits apply to 403(b) and 457 plans as well. The ceiling on SIMPLEs will remain $11,500. Those aged 50 or older will be able to put in an additional $2,500. Plan contributions can be based on up to $250,000 of salary next year.

The paying limitation for defined contribution plans increases to $50,000
in 2012. That?s a $1,000 increase for Keogh plans, profit sharing plans and the like.
Anyone making over $115,000 is considered "highly paid" for plan discrimination testing.

The benefit limit for pension plans is set to rise to $200,000 next year.

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