Publication 590 – IRS Updates for Your IRA
Ok, so it may not be as exciting, titillating, and erotic as Fifty Shades of Grey, but the IRS Publication 590, a comprehensive guide to Individual Retirement Arrangements (released in December or 2011) covers new rules for 2011 and 2012. Bust out the whips and chains, ’cause here’s 103-sultry-pages of what’s new and good with the Publication 590 and IRS Updates for Your IRA.
There is no income limit for IRA contributions, at first glance, but don’t get too excited. If you want those but for these contributions to be deductible, however, there has to be limits, and those limits THANKFULLY increased in 2012.
What if My Job Covers My Retirement Plan?
If you’re fortunate enough to work for a company that covers your retirement plan, you should know that deductions for IRA contributions get phased out if your modified adjusted gross income (AGI) meets any of the following criteria:
- More than $92,000 but less than $112,000 for a married couple filing a joint return or a qualifying widow(er),
- More than $58,000 but less than $68,000 for a single individual or head of household, or
- Less than $10,000 for a married individual filing a separate return.
Now let’s talk about your Roth IRA. If you’re starting to look as old as Diamond David Lee Roth – guess what – you need a ROTH! For those who don’t have a Roth or need a refresher, a Roth is a special type of retirement plan that is typically tax-free, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. The Roth is different from other tax advantaged IRA’s in that the tax break is given on the money withdrawn during retirement, rather than on the money contributed. There are a few stipulations that can impact the amount you can contribute. If your AGI falls into any of these categories, be prepared for the modification.
- at least $173,000 and your filing status is married filing jointly or qualifying widow(er). You are disqualified from making any Roth IRA contribution if your modified AGI is $183,000 or more.
- at least $110,000 and your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2012. You are disqualified from making any Roth IRA contribution if your modified AGI is $125,000 or more.
- is more than -0- and your filing status is married filing separately, you lived with your spouse at any time during the year. You are disqualified from making any Roth IRA contribution if your modified AGI is $10,000 or more.
You can contribute to your IRA anytime during 2012 or by the return filing due date (excluding time extensions).
There ya have it, kids. The 2012 IRS 590 Cliff’s Notes. Fifty Shades of Grey – pshhhh, who needs it.