James D. Lynch
401(k) and IRA Contribution Limits for 2021 Remain Unchanged
Employees who are saving for retirement through 401(k) plans can contribute up to $19,500 in 2021. That's the same contribution limit in place for 2020. The catch-up contribution limit for employees age 50 and older also remains unchanged in 2021 at $6,500, for a total contribution limit of $26,000 for employees 50 and older.
IRA contribution limits in 2021 will also be the same as 2020. The 2021 limit on annual contributions to a traditional or Roth IRA remains unchanged at $6,000. The IRA catch-up contribution for people 50 and over remains $1,000, for a total contribution limit of $7,000 for IRA savers age 50 and older.
Even though contribution limits have not changed, certain income thresholds are increasing for 2021. Thus, a greater number of people will be able to make tax-deductible contributions to a traditional IRA or to contribute to a Roth IRA, because the maximum allowable income levels for such IRA contributions increase for 2021. In addition, the 2021 income limits to claim the Saver's Credit also increase for 2021, making more people eligible for this credit.