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

A husband in a white shirt and his wife in stripes embrace and smile as they stand in the yard outside their home

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

People’s United Advisors can help

Come see us about prudent investing.

Red and blue telephone. Call this phone number for help, to speak with an expert or for more information

800-772-8778

People's United Advisors official logo

Disclosure

Investment products are offered through People’s United Advisors, Inc., a registered investment advisor. People’s United Advisors, Inc. is a wholly-owned subsidiary of People’s United Bank, N.A.

Investment Products are:

• Not Insured by FDIC or any Federal Government Agency
• Not a Deposit of or Guaranteed by a Bank or any Bank Affiliate
• May Lose Value


Form CRS - ADV Part 2A - Privacy Policy - Legal Disclosure - Wrap Fee Disclosure

PUA is not soliciting any action based on this material. It is for general informational purposes only. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors.

© 2021 People's United Bank, N.A.