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:
ComplianceTax & AccountingNovember 02, 2020
Internal Revenue Service announces cost-of-living adjustments for 2021: IRA regular contribution limit will remain at $6,000
| 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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