Social Security and Retirement Plan Contribution Increases for 2012

Social Security

After two years of no increases, Social Security recipients will see an increase of 3.6% in their benefit.  The bad news is that increases in Medicare B may reduce the impact of the increase.

Retirement Plan Contributions

For participants in 401(k), 403(b), and 457 Deferred Compensation Plans, the annual deferral limit for 2012 was increased from $16,500 to $17,000 annually.  This was due to an adjustment for inflation which kicks in only when the increase is in increments of $500.  The over-50 “catch-up” contribution amount of $5,500 remains the same.

For participants in SIMPLE IRA Plans both the salary deferral amount ($11,500) and over-50 “catch-up” amount ($2,500) are unchanged from their 2011 levels.

Traditional and ROTH IRA limits remain at $5,000 for 2012.  The over-50 “catch-up” contribution for both is $1,000 (same as it was for 2011).

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