Income ranges for eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the Saver’s Credit will all increase for 2021, according to the Internal Revenue Service.
For single taxpayers covered by a workplace retirement plan, the range is $66,000 to $76,000, up from $65,000 to $75,000. For married taxpayers filing jointly (MFJ) where the spouse making the IRA contribution is covered by a workplace retirement plan, the range is $105,000 to $125,000, up from $104,000 to $124,000.
For an IRA contributor not covered by a workplace retirement plan and married to someone who is covered, the deduction is phased out if the couple’s income is $198,000 to $208,000, up from $196,000 and $206,000.
For a married taxpayer filing singly (MFS) who is covered by a workplace retirement plan, the phase-out range remains $0 to $10,000.
Among other points:
The income limit for the Saver’s Credit is $66,000 for MFJ, up from $65,000; $49,500 for heads of household, up from $48,750; and $33,000 for singles and MFS, up from $32,500.
The income phase-out range for taxpayers making contributions to a Roth IRA is $125,000 to $140,000 for singles and heads of household, up from $124,000 to $139,000. For MFJ, the income phase-out range is $198,000 to $208,000, up from $196,000 to $206,000. The range for a taxpayer MFS who makes contributions to a Roth IRA remains $0 to $10,000.
The limit on contributions by employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $19,500.
The catch-up contribution limit for employees 50 and older who participate in these plans remains unchanged at $6,500.
The limitation regarding SIMPLE retirement accounts remains unchanged at $13,500.
The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up limit for those 50 and older isn’t subject to an annual COLA and remains $1,000.
Credit: Jeff Stimpson Freelance writer
Original Article: Accounting Today