Retirement Savings
ComplianceTax & AccountingNovember 02, 2020

Internal Revenue Service announces cost-of-living adjustments for 2021: IRA regular contribution limit will remain at $6,000

On October 26, 2020 the Internal Revenue Service announced retirement plan related cost-of-living adjustments (COLAs) for 2021. Though some figures including the $6,000 regular contribution limit for traditional and Roth IRAs will remain the same, certain income thresholds that determine traditional IRA deductibility, Roth IRA eligibility, and saver’s tax credit eligibility will slightly increase. Those limits as well as simplified employee pension (SEP) limits, elective deferral limits, and Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA deferral limits for 2021 are as follows:

IRA Contribution Limits
Tax Year Contribution Limit Catch-Up Contribution Age 50 and Older Contribution Limit
2021 $6,000 $1,000 $7,000
Traditional IRA Deductibility MAGI Thresholds*
Filing Status Tax Year Full Deduction Partial Deduction No Deduction
Single 2021 ≤ $66,000 Between $66,000 and $76,000 ≥ $76,000
Married, Joint 2021 ≤ $105,000 Between $105,000 and $125,000 ≥ $125,000
Married, Joint (not active participant but spouse is) 2021 ≤ $198,000 Between $198,000 and $208,000 ≥ $208,000
Married, Separate 2021 N/A < $10,000 ≥ $10,000
*Applies to individuals that actively participate in an employer sponsored retirement plan.
Roth IRA Eligibility MAGI Thresholds
Filing Status Tax Year Full Contribution Partial Contribution No Contribution
Single 2021 ≤ $125,000 Between $125,000 and $140,000 ≥ $140,000
Married, Joint 2021 ≤ $198,000 Between $198,000 and $208,000 ≥ $208,000
Married, Separate 2021 N/A < $10,000 ≥ $10,000
Saver's Tax Credit MAGI Thresholds
Filing Status Credit is 50% of Contribution if Income is: Credit is 20% of Contribution if Income is: Credit is 10% of Contribution if Income is: No Credit if Income is:
Married, Joint ≤ $39,500 $39,501 - $43,000 $43,001 - $66,000 > $66,000
Head of Household ≤ $29,625 $29,626 - $32,250 $32,251 - $49,500 > $49,500
All Other Filers ≤ $19,750 $19,751 - $21,500 $21,501 - $33,000 > $33,000
SEP Contribution Limits
Tax Year  
2021 The lesser of 25% of the first $290,000 of compensation or $58,000
Elective Deferral Limits
Tax Year Deferral Limit Catch-Up Deferral Age 50 and Older Total Deferral Limit
2021 $19,500 $6,500 $26,000
SIMPLE Contribution Limits
Tax Year SIMPLE Deferral Limit Catch-Up Deferral Age 50 and Older Total Deferral Limit
2021 $13,500 $3,000 $16,500

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Mike Schiller
Manager, Specialized Consulting, Tax Advantaged Accounts
With more than 22 years of experience, Mike has worked closely with hundreds of financial organizations to help them create, implement, and maintain their tax-advantaged accounts program.