Saving for Retirement: How Much Can You Contribute in 2021?

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With the new year comes information from the IRS on how much you can add to your tax-advantaged retirement plans and related issues. The new annual limits for some major vehicles are spelled out in the table below.

PLAN VEHICLE
2021 LIMITS
2020 LIMITS
TRADITIONAL IRA
Standard: $6K
Catch-Up: $1K if 50 or older
Same
Pre-tax contributions; withdrawals taxed as ordinary income.
ROTH IRA
Standard: $6K
Catch-Up: $1K
Same
Same
Contributions taxed; withdrawals not taxed if in accord with Roth rules.
ROTH INCOME LIMITS2
Single: <$140K
Married:3 >$208K
<$139
<$206K
Limits here are for partial contributions; limits for full contributions are lower. Roth 401(k)s have no income limits.
TRADITIONAL IRA INCOME2 LIMITS ON DEDUCTING CONTRIBUTIONS
Not Covered By Plan at Work:
Single: No limit
Married: Phase-out at >$198K - ≥$208K
Covered By Plan at Work:
Single: Phase-out at >$66K - ≥$76K
Married: Phase-out at >$104K - ≥$124K

No limit
Phase-out at $196K - ≥$206K

Phase-out at >$65K - ≥$75K
Phase-out at >$104K - ≥$124K
401K
Standard: $19.5K
Catch-Up: $6.5K
Same
Same
Limit on employee before-tax & after-tax contributions plus employer contributions is $58K + $6.5K catch-up in 2021, vs. $57K + $6.5K in 2020.
SEP IRA
Standard: $58K4
Catch-Up: None
$57K
None
Designed for small and owner-only businesses. Generally, employees must be covered by employer.
SOLO 401K
Standard: $58K
Catch-Up: $6.5K
$57K
Same
May be useful when the business owner and spouse are the only workers.
SIMPLE IRA
Standard: $13.5K
Catch-Up: $3K
Same
Same
For businesses with up to 100 employees; employers must contribute to employees, and employees may also contribute
SAVER'S TAX CREDIT (INCOME LIMIT)


Single: $33K
Married: $66K
Max Ann. Credit
$1K
$2K


$32.5K
$66K
Max Ann. Credit
Same
Same
For lower- and moderate-income savers contributing to retirement plans..

You should consult your financial and tax advisors about any retirement strategies.1 It’s always a good time to plan for retirement. If you’d like any help, we’re here for you.

1 Defined-benefit plans are not covered in the table above
2 Modified Adjusted Gross Income: AGI with certain items, including tax-free interest, added back
3 Throughout this table, “Married” assumes filing tax returns jointly
4 Lesser of that amount or certain percentages of business revenue; also applies to 2020 and to the limits for both years in Solo 401(k)s

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