2012 Inflation Adjusted and Pension Plan Amounts

New 2012 Inflation Adjusted Amounts

In order to keep pace with the rise of inflation, the IRS adjusted dozens of tax benefits for 2012. The following are some of the affected items:

• Personal and Dependency Exemption – $3,800 (up $100 from 2011)
• Standard Deduction – $11,900 for married couples filing a joint return (up $300)
• $5,950 for singles and married individuals filing separately (up $150), and
• $8,700 for heads of households (up $200)
• Tax bracket thresholds will increase for each filing status
• Basis exclusion for the estate tax will be set at $5,120,000 (up from $5,000,000)
• Monthly exclusion amount for qualified parking will be $240
• The social security wage base will increase to $110,100 (up from $106,800)

2012 Pension Plan Amounts

The IRS published cost-of-living adjustments to various pension plan and related amounts for 2012. Below are the new limits:

• benefit limit for defined benefit plans will increase from $195,000 to $200,000
• defined contribution plan limit will go up from $49,000 to $50,000
• compensation limit for determining benefits and contributions will increase from $245,000 to $250,000
• definition of a highly compensated employee will go from $110,000 to $115,000
• Elective deferral limit for employees who participate in 401(k), 403(b), and most 457 plans will go from $16,500 to $17,000.

The following dollar limitations will stay the same—the $550 SEP contribution threshold, and the $11,500 SIMPLE elective deferral limitation.

November 2011

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

Tags: IRA, Retirement