New Limits For 2011

Originally posted on the Tree.com Money and Finance Channel

Roth/IRA

2011 Combined Traditional and Roth IRA Contribution Limits:

At the end of 2011, if you are under 50 years old, the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2011.

According to the IRS, this limit can be split between a traditional IRA and a Roth IRA but the combined limit is $5,000.The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income.

At the end of 2011if you are 50 or over, the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2011.

According to the IRS, this limit can be split between a traditional IRA and a Roth IRA but the combined limit is $6,000. The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income.

401 k

For 2011, the cost of living adjustment (COLA) remains the same as in 2010.

The maximum amount you can contribute to your 401 (k) stays at $16,500 for people aged 50 and younger with an additional catch-up contribution available that holds at $5,500. These same limits apply to other plans, such as 403(b) and the Thrift Savings Plan.

Matching contributions made by your employer are not included in these final 401k contribution limits. This applies even if you contribute the maximum every year. The matches are added despite the 401k limits.

HSAs

For 2011, HSA contribution levels remain the same as they were for 2010.
Individuals who maintain HSAs combined with a consumer driven high deductible plan (CDHP) may contribute a maximum of $3,050 for tax year, and families may contribute a maximum of $6,150.


An individual must have a plan deductible of at least $1,200.  Annual out of pocket expenses including deductibles, co-insurance, co-pays and other amounts may not exceed $5,959. Family coverage must have a deductible of at least $2,400 and maximum out of pocket costs cannot exceed $11,900.

Beginning in 2011 purchases of drugs will be limited to prescription medications. Tax free HSA money may no longer be used to purchase over-the-counter medications.

Also, use of HSA funds for non-qualifying expenses incurs a 20% penalty up from the 2010 10% penalty. In addition to the penalty for a non-qualified withdrawal, the funds must be reported as income and taxes must be paid on that income.

Deductions for miles

For 2011, the standard mileage rates for the use of a car. van, pickup, or panel truck are:


* 51 cents per mile for business miles driven
* 19 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

You may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Also, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously. You have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.