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The 401(k) Gets a Raise in 2012

2012 401k Contribution Limits
Photo Credit o5com


Good news retirement savers! Starting next year, you’ll be able to contribute more to your work retirement plan.

The IRS raised the 2012 contribution limit to $17,000 for 401(k) investments, 403(b)s,  most 457s and Thrift Savings Plans. The $500 raise is the first lift to the limit since 2009. The reason for the increase is simple, inflation. The contribution limit, by law, adjusts for inflation and because we saw a rise in inflation, we see a higher contribution limit.


The full outline of 2012 contribution limits can be found here, below are a few notable figures:

  • The annual combined employer/employee limit was raised from $49,000 to $50,000.
  • The catch-up contribution limit, for workers 50 plus, will remain the same in 2012 at $5,500.
  • IRA contribution limits stayed the same at $5,000 with an additional $1,000 if you are over 50.
  • SIMPLE contribution limits ($11,500) and SIMPLE catch-up limits ($2,500) remained at 2011 levels.

This is good news for those looking to max out their contribution limit, and a fair number of people do. A recent fidelity report found that nearly one third of retirees contributed to the limit allowed in the final period prior to retirement, while 15% of employees still working contributed the maximum amount.

The release of the annual contribution limits offers a great time to assess how much you are contributing to your work retirement plan and to decide if an increase is needed. While maxing out your retirement contribution may not be possible for everyone, it is important to contribute as much as you can toward your work retirement plan and aim to save at least enough to receive your company’s matching contribution, if available.

If you have any questions about saving and planning for your retirement, get in touch with our advising team at or 877-627-8401.

Evan Davis

Marketing Associate

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at