Retirement Plans Newsletter

BULLETIN
October 26, 2020

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[Official Guidance]

Text of IRS Notice 2020-79: 2021 Limitations Adjusted as Provided in Section 415(d), etc. (PDF)

"Effective January 1, 2021, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) remains unchanged at $230,000....

"The limitation for defined contribution plans under § 415(c)(1)(A) is increased for 2021 from $57,000 to $58,000....

"The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $19,500.

"The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $285,000 to $290,000.

"The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of 'key employee' in a top-heavy plan remains unchanged at $185,000....

"The compensation amount under § 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $600 to $650....

"The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contributions credit for married taxpayers filing a joint return is increased from $39,000 to $39,500; the limitation under § 25B(b)(1)(B) is increased from $42,500 to $43,000; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $65,000 to $66,000....

"The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $6,000." Icon to read more

Internal Revenue Service [IRS]

[Official Guidance]

IRS Announces 2021 Changes to Income Ranges for Determining IRA Eligibility

"Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2021:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $66,000 to $76,000, up from $65,000 to $75,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $105,000 to $125,000, up from $104,000 to $124,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $198,000 and $208,000, up from $196,000 and $206,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

"The income phase-out range for taxpayers making contributions to a Roth IRA is $125,000 to $140,000 for singles and heads of household, up from $124,000 to $139,000. For married couples filing jointly, the income phase-out range is $198,000 to $208,000, up from $196,000 to $206,000." Icon to read
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Internal Revenue Service [IRS]

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