November 5, 2020
2021 IRS Retirement Plan Contribution Limits
Industry update: Where and how can your clients contribute next year?
How much can your clients save for retirement in 2021 in tax-advantaged accounts? The Treasury Department has announced inflation-adjusted figures for retirement account savings for 2021. What savers can actually contribute to their accounts has remained unchanged for 401(k), 403(b), most 457 plans and Thrift Savings Accounts, the IRS said in its announcement. Individual retirement account contribution limits are also the same for 2021 — $6,000 with an additional catch-up contribution of $1,000 for people 50 and older. SIMPLE retirement accounts still have the limit at $13,500 for next year.
Highlights of Changes for 2021:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $66,000 to $76,000, up from $65,000 to $75,000.
- For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $105,000 to $125,000, up from $104,000 to $124,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $198,000 and $208,000, up from $196,000 and $206,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- Single and heads of households have an income phase-out range of $125,000 to $140,000, up $1,000 from 2020.
- Married couples who file jointly have an income phase-out range of $198,000 to $208,000, Married couples filing separately have a phase-out range that remains unchanged, $0 to $10,000.
- Low- and moderate-income workers have an income limit of $66,000 if they are married filing jointly, up from $65,000 in 2020. Heads of household have a limit of $49,500, and single individuals or those married filing separately have a limit of $32,500.
For more information, visit IRS.gov.
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