There's good news and bad news from the IRS for Americans saving for retirement with IRAs, 401(k)s, and other retirement accounts in 2021.
Let's start with the bad news: Contribution limits won't go up next year.SEE MORE The 100 Most Popular Mutual Funds for 401(k) Retirement Savings
And now the good news: The maximum income levels allowed to make deductible contributions to traditional IRAs, contribute to Roth IRAs, and claim the Saver's Credit all increase for 2021.Retirement Plan Contribution Limits for 2021
For 2021, employees who are saving for retirement through 401(k)s, 403(b)s, most 457 plans, and the federal government's Thrift Savings Plan can contribute up to $19,500 to those plans during the year. That's the same contribution limit in place for 2020.
The "catch-up" contribution limit for employees age 50 or older who participate in these plans also holds steady in 2021 at $6,500.SEE MORE Why Are Roth Conversions So Trendy Right Now? The Case FOR and AGAINST Them
For anyone saving for retirement with a traditional or Roth IRA, the 2021 limit on annual contributions to their IRA account remains unchanged at $6,000. That's the same amount as it was for both 2019 and 2020. The additional IRA "catch-up" contribution for people 50 and over is not subject to an annual cost-of-living adjustment and stays at $1,000, too.
Likewise, the contribution limit for a SIMPLE IRA, which is a retirement plan designed for small businesses with 100 or fewer employees, stays put at $13,500 for 2021.Income Ranges for 2021
Increased income ranges for the traditional IRA deduction, Roth IRA contributions, and the Saver's Credit means more Americans will qualify for these tax breaks.SEE MORE 10 Things You'll Spend Less on in Retirement
If you're contributing to a traditional IRA, the deduction allowed for your contribution is gradually phased-out if your income is above a certain amount. For 2021, the phase-out ranges are:$66,000 to $76,000 for a single person covered by a workplace retirement plan (up from $65,000 to $75,000 in 2020);$105,000 to $125,000 for a married couple filing jointly if the spouse making the IRA contribution is covered by a workplace retirement plan (