68.7 F
Los Angeles

HomeLifestyleMoney MattersIRA and Retirement Plan Limits for 2021

IRA and Retirement Plan Limits for 2021

Many IRA and retirement plan limits are indexed for inflation each year. While some of the limits remain unchanged for 2021, other key numbers have increased. 

IRA contribution limits 

The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2021 is $6,000 (or 100% of 

your earned income, if less), unchanged from 2020. The maximum catch-up contribution for those age 50 

or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2021, but your total 

contributions cannot exceed these annual limits. 

Income limits for deducting traditional IRA contributions 

If you (or if you’re married, both you and your spouse) are not covered by an employer retirement plan, your 

contributions to a traditional IRA are generally fully tax deductible. If you’re married, filing jointly, and you’re 

not covered by an employer plan but your spouse is, your deduction is limited if your modified adjusted 

gross income (MAGI) is between $198,000 and $208,000 (up from $196,000 and $206,000 in 2020), and 

eliminated if your MAGI is $208,000 or more (up from $206,000 in 2020). 

For those who are covered by an employer plan, deductibility depends on your income and filing status. 

Lillian 1st chart

If your filing status is single or head of household, you can fully deduct your IRA contribution up to $6,000 ($7,000 if you are age 50 or older) in 2021 if your MAGI is $66,000 or less (up from $65,000 in 2020). If you’re married and filing a joint return, you can fully deduct up to $6,000 ($7,000 if you are age 50 or older) if your MAGI is $105,000 or less (up from $104,000 in 2020). 

Income limits for contributing to a Roth IRA 

The income limits for determining how much you can contribute to a Roth IRA have also increased. 

Lillian 2nd chart

If your filing status is single or head of household, you can contribute the full $6,000 ($7,000 if you are age 

50 or older) to a Roth IRA if your MAGI is $125,000 or less (up from $124,000 in 2020). And if you’re 

married and filing a joint return, you can make a full contribution if your MAGI is $198,000 or less (up from 

$196,000 in 2020). Again, contributions can’t exceed 100% of your earned income. 

Employer retirement plan limits 

Most of the significant employer retirement plan limits for 2021 remain unchanged from 2020. The 

maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan remains $19,500 in 2021. 

This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Plan. If you’re age 50 or 

older, you can also make catch-up contributions of up to $6,500 to these plans in 2021. [Special catch-up 

limits apply to certain participants in 403(b) and 457(b) plans.] 

The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) remains $13,500 in 2021, and the 

catch-up limit for those age 50 or older remains $3,000. 

lillian 3rd chart

Note: Contributions can’t exceed 100% of your income. 

If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($19,500 in 2021 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can defer the full dollar limit to each plan — a total of $39,000 in 2021 (plus any catch-up contributions). 

The maximum amount that can be allocated to your account in a defined contribution plan [for example, a 401(k) plan or profit-sharing plan] in 2021 is $58,000 (up from $57,000 in 2020) plus age 50 or older catch-up contributions. This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan. 

Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2021 is $290,000 (up from $285,000 in 2020), and the dollar threshold for determining highly compensated employees (when 2021 is the look-back year) remains $130,000 (unchanged from 2020). 


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. 

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. 

Lillian Appleby

Author: Lillian Appleby

Lillian Appleby, C(k)P, PPC is a managing director at Angeles Retirement Consulting, LLC and branch manager/registered principal at LPL Financial. Lillian has been a licensed wealth manager and retirement planner since 1990. Securities and advisory services are offered though LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. For hyperlinks to FINRA and SIPC, www.finra.org and www.sipc.org. Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. For a list of states in which I am registered to do business, please visit www.lillianappleby.com

Lillian Applebyhttp://lillianappleby.com
Lillian Appleby, C(k)P, PPC is a managing director at Angeles Retirement Consulting, LLC and branch manager/registered principal at LPL Financial. Lillian has been a licensed wealth manager and retirement planner since 1990. Securities and advisory services are offered though LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. For hyperlinks to FINRA and SIPC, www.finra.org and www.sipc.org. Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. For a list of states in which I am registered to do business, please visit www.lillianappleby.com
- Advertise with NoHo Arts District -spot_img

Most Popular