Contribution limits for Individual Retirement Arrangements (IRAs) are reviewed every year based on cost-of-living increases. When cost-of-living index thresholds are met, certain features of retirement plans must be adjusted.

It’s important to stay on top of any adjustments to the Internal Revenue Code so you don’t miss the opportunity to make the most of your IRA. I’ll cover the revised 2012 contribution and deduction limits for traditional IRAs, Roth IRAs, SEP-IRAs, and SIMPLE IRAs.

What is the 2012 Traditional IRA Contribution Limit?

The maximum contribution you can make to a traditional IRA for 2012 remains unchanged from 2011. You can contribute an amount equal to your taxable compensation up to $5,000.

If you’re age 50 or older by the end of the year, you can contribute an amount equal to your taxable compensation up to $6,000. This is commonly referred to as the “catch up” provision that allows older workers to contribute a higher amount as they get closer to retirement age.

For instance, if you’re 52 years old and earn $5,500 working part-time, you can contribute up to $5,500 to an IRA in 2012. If you’re 35 and earn $40,000, you can contribute no more than $5,000.

What is the 2012 Traditional IRA Deductible Contribution Limit?

If you make contributions to a traditional IRA and neither you nor your spouse participate in a retirement plan at work, your contributions are fully tax deductible.

However, if you are covered by a qualified workplace retirement plan, your deduction for traditional IRA contributions is reduced according to your income and tax filing status.

Check the following to see if any part of your contribution is deductible according to the increased limits for 2012:

• Single, Head of Household, or Married Filing Separately (and you did not live with your spouse): Your deduction for traditional IRA contributions is reduced when your modified adjusted gross income (MAGI) is from $58,000 up to $68,000. You can’t take a deduction if your MAGI is $68,000 or more.

• Married Filing Jointly and Qualifying Widow(er): Your deduction for traditional IRA contributions is reduced when your MAGI is from $92,000 up to $112,000. You can’t take a deduction if your MAGI is $112,000 or more.

• Married Filing Separately (and you lived with your spouse): Your deduction for traditional IRA contributions is reduced when your MAGI is from $0 up to $10,000. You can’t take a deduction if your MAGI is $10,000 or more.

Additionally, there are different rules for deducting traditional IRA contributions when you don’t have a workplace retirement account—but your spouse does. Here are the increased limits for 2012:

• Married Filing Jointly: Your deduction for traditional IRA contributions is reduced when your MAGI is from $173,000 up to $183,000. You can’t take a deduction if MAGI on your joint return is $183,000 or more.

• Married Filing Separately (and you lived with your spouse): Your deduction for traditional IRA contributions is reduced when your MAGI is from $0 up to $10,000. You can’t take a deduction if your MAGI is $10,000 or more.

• Married Filing Separately (and you did not live with your spouse): You can take a full deduction for traditional IRA contributions.

What is the 2012 Roth IRA Contribution Limit?

The maximum contribution you can make to a Roth IRA for 2012 is the same as for a traditional IRA. It remains unchanged from 2011 at $5,000 or $6,000 if you’re age 50 or older.

Note that this annual contribution limit can be split between a traditional and a Roth IRA in any proportion you like, as long as you don’t exceed it. For example, if you’re 38 years old and earn $40,000 in 2012, you could contribute $1,000 to a traditional IRA and $4,000 to a Roth IRA in the same year.

What is the 2012 Roth IRA Income Limit?

In order to contribute to a Roth IRA, there are annual limits on your income. Though the amount you can contribute to a Roth IRA for 2012 hasn’t increased, the limitation on income has increased, making more taxpayers eligible to participate.

Here are the increased annual income limits for 2012:

• Single, Head of Household, or Married Filing Separately (and you did not live with your spouse): The amount you can contribute to a Roth IRA is reduced or phased out when your MAGI ranges from $110,000 up to $125,000. You can no longer make contributions when your MAGI is $125,000 or more.

• Married Filing Jointly and Qualifying Widow(er): The amount you can contribute to a Roth IRA is phased out when your MAGI is from $173,000 up to $183,000. You can no longer make contributions when your MAGI is $183,000 or more.

• Married Filing Separately (and you lived with your spouse): The amount you can contribute to a Roth IRA is phased out when your MAGI is from $0 up to $10,000. You can’t contribute to a Roth IRA when your MAGI is $10,000 or more.

What is the 2012 SEP-IRA Contribution Limit?

A Simplified Employee Pension that uses a traditional IRA is called a SEP-IRA. It’s a retirement plan for small businesses or those who are self-employed. The annual contribution has increased slightly from 2011. You can contribute up to 25% of your net earnings or W-2 income up to $50,000 for 2012.

What is the 2012 SIMPLE IRA Contribution Limit?

A SIMPLE IRA stands for Savings Incentive Match Plan for Employees. It’s a retirement plan for businesses or those who are self-employed. The amount an employee can contribute for 2012 remains unchanged at $11,500 or $14,000 if you’re age 50 or older.

Using an IRA is a smart way to invest for your future retirement and get additional tax breaks no matter if you’re employed, are an unemployed spouse, have a part-time side-hustle, or run a small business with employees.