Taxpayers will be able to set aside an extra $500 in 401(k) plans and benefit from an additional $120,000 estate tax exemption in 2012, under cost-of-living adjustments announced by the Internal Revenue Service.
The 401(k) contribution cap will be $17,000 in 2012, up from $16,500 this year. The 401(k) limits also affect contributions to similar accounts, including the 403(b) plans for school employees and nonprofit workers and the Thrift Savings Plan for federal employees.
The estate tax exemption for 2012 will be $5.12 million, up from $5 million this year. The higher threshold is scheduled to expire at the end of 2012, and the $1 million limit under previous law is set to return. The annual exclusion for the gift tax will be $13,000, unchanged from 2011.
Full story: IRS Raises Contribution Cap for 401(k) Plans – Bloomberg.