October 2020

IRA Contribution Limits for 2021 - Unchanged $6,000 and $7,000

The 2021 maximum limits for annual traditional IRA and Roth IRA contributions remain the same at $6,000 (if under age 50) and $7,000 (if age 50 or older). For 2020 the limits are also $6,000 and $7,000. Federal tax law provides for a change in the contribution limit once the cost of living adjustment equals or exceeds $500. The annual contribution catch-up for individuals age 50 or older remains at $1,000 as it is not indexed. Note on page 2 that the compensation limits used to determine the amount an IRA owner who is an active participant is able to claim as a tax deduction for their traditional IRA contribution have increased.

The 2021 maximum contribution limit for SEP-IRAs is increased to $58,000 (or, 25% of compensation, if lesser) up from $57,000. The minimum SEP compensation limit used to determine if an employer must make a contribution for a part-time employee has increased to $650 from $600.

The 2021 maximum contribution limits for SIMPLE-IRAs have not changed. It is $13,500 if the individual is under age 50 and $16,500 if age 50 or older. The catch-up amount of $3,000 has not changed.

The 2021 maximum elective deferral limit for 401(k) participants also has not changed. It is $19,500 for participants under age 50 and $26,000 for participants age 50 and older. The catch-up amount of $6,500 has not changed.

Contribution limits for a person who is not age 50 or older.
Tax Year Amount
2008-12 $5,000
2013-18 $5,500
2019-21 $6,000

Contribution Limits for a person who is age 50 or older.
Tax Year Amount
2008-12 $6,000
2013-18 $6,500
2019-21 $7,000