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IRS Releases 2021 Contribution Limits

How much can you save in 2021 in tax-advantaged accounts? The Internal Revenue Service recently announced the 2021 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits. Many of the key employee contribution limits remain unchanged from the 2020 limits. Here’s a list of some of the most common limits:

Retirement Plan Limits

2021 Limits 2020 Limits
IRA Contributions $6,000 $6,000
IRA Catch-Up Contributions (age 50 or older) $1,000 $1,000
401(k)/403(b)/457(b) Elective Deferrals $19,500 $19,500
Catch-Up Contribution (plans other than SIMPLE plans; age 50 or older) $6,500 $6,500
SIMPLE Plan Employee Deferrals $13,500 $13,500
SIMPLE Plan Catch-Up Contributions (age 50 or older) $3,000 $3,000
Plan Maximum Annual Contribution- Defined Contribution Plans (Section 415(c)) $58,000 $57,000
Maximum Annual Benefit- Defined Benefit Plans (Section 415(b)) $230,000 $230,000
Highly Compensated Employee Definition under Section 414(q) $130,000 $130,000
Key Employees Officer Compensation for Top-Heavy Plans $185,000 $185,000

Health Savings Accounts Limits

2021 Limits 2020 Limits
HSA Contribution- Annual Contribution Limit
Self-Only Coverage $3,600 $3,550
Family Coverage $7,200 $7,100
Catch-Up Contributions (age 55 or older) $1,000 $1,000
High Deductible Health Plan- Minimum Annual Deductible
Self-Only Coverage $1,400 $1,400
Family Coverage $2,800 $2,800
High Deductible Health Plan- Maximum Out of Pocket Limit
Self-Only Coverage $7,000 $6,900
Family Coverage $14,000 $13,800

Deductible IRA Phase-Outs

In 2021, the deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $66,000 and $76,000, up from $65,000 and $75,000 in 2020. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $105,000 to $125,000 for 2021, up from $104,000 to $124,000 in 2020.

For a person 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 in 2021, up from $196,000 and $206,000 in 2020.

Roth IRA Phase-Outs

In 2021, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $198,000 to $208,000 for married couples filing jointly, up from $196,000 to $206,000 in 2020. For singles and heads of household, the income phase-out range is $125,000 to $140,000, up from $124,000 to $139,000 in 2020.

We’re here to help you sort through all of these limits and determine the best savings plan for you. Please reach out to us if you have questions about any of the limits for 2021.

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