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# 401(k) and IRA changes for 2021: Where and how can you contribute next year?

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401(k) and IRA changes for 2021: Where and how can you contribute next year?
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Look out for these changes coming to your retirement accounts next year.

Like many Americans, the Internal Revenue Service is looking ahead to 2021, and on Monday the agency announced what changes to expect for individual retirement accounts and 401(k) contribution limits.

What savers can actually contribute to their accounts has remained unchanged for 401(k), 403(b), most 457 plans and Thrift Savings Accounts, the IRS said in its announcement. That means workers will still be able to save $19,500, or $26,000 if they are aged 50 or older (thanks to the catch-up contribution limit, unchanged at $6,500).

Individual retirement account contribution limits are also the same for 2021 — $6,000 with an additional catch-up contribution of $1,000 for people 50 and older. SIMPLE retirement accounts still have the limit at $13,500 for next year.

See: I want to take money out of my Roth IRA tax-free — when can I do that?

But here’s what has changed for 2021:

Phase-outs for tax deductions related to traditional IRA contributions. Taxpayers are allowed to deduct contributions to a traditional IRA depending on certain factors, such as that they do not participate in an employer-sponsored retirement account and do not make over the earnings limits. Workers or their spouses covered by a plan may be subject to a reduced or eliminated deduction. For 2021, the phaseout ranges are:
- Single taxpayers covered by an employer’s retirement plan have a phaseout range of $66,000 to $76,000 (up $1,000 from 2020).
- If a spouse in a married couple who files jointly is covered by a workplace plan and is the one contributing to the traditional IRA, the phaseout range is $105,000 to $125,000 in 2021. For someone who is not covered by a workplace plan but is married to someone who is, the phaseout range for the couple’s income is $198,000 to $208,000.
- Married couples filing separately and covered by an employer-sponsored plan have a phaseout range of $0 to $10,000, which is unchanged from 2020.
Those who are allowed to contribute to a Roth IRA. Individuals who contribute to a Roth IRA do not receive tax deductions and are held to income limits. For 2021, the income phaseout ranges are:
- Single and heads of households have an income phaseout range of $125,000 to $140,000, up $1,000 from 2020.
- Married couples who file jointly have an income phaseout range of $198,000 to $208,000, Married couples filing separately have a phaseout range that remains unchanged, $0 to $10,000.
The income limit for the Saver’s Credit. Low- and moderate-income workers have an income limit of $66,000 if they are married filing jointly, up from $65,000 in 2020. Heads of household have a limit of $49,500, and single individuals or those married filing separately have a limit of $32,500.