The 2021 September contribution limits refer to the maximum amount of money that an individual can contribute to certain types of accounts, such as retirement or health savings accounts, during the month of September in 2021. These limits are set by the Internal Revenue Service (IRS) and may vary depending on the type of account and the individual’s age and income level. It is important for individuals to be aware of these contribution limits in order to maximize their savings and take advantage of any tax benefits that may be available.
IRA Contribution Limits for 2021
As we approach the end of 2020, it’s important to start thinking about your retirement savings plan for the upcoming year. One key aspect of this plan is understanding the contribution limits for individual retirement accounts (IRAs) in 2021.
For those under the age of 50, the maximum contribution limit for traditional and Roth IRAs will remain at $6,000 in 2021. However, for those over the age of 50, there is a catch-up contribution limit of an additional $1,000, bringing the total contribution limit to $7,000.
It’s important to note that these contribution limits apply to both traditional and Roth IRAs combined. So if you have both types of accounts, your total contributions cannot exceed the annual limit.
Another factor to consider is your income level. For traditional IRAs, there are income limits that determine whether or not you can deduct your contributions on your tax return. In 2021, the income limit for single filers who are covered by a workplace retirement plan will be $66,000-$76,000. For married couples filing jointly, the income limit will be $105,000-$125,000.
If you make more than these amounts, you can still contribute to a traditional IRA, but you won’t be able to deduct your contributions on your tax return. For Roth IRAs, there are also income limits that determine whether or not you can contribute. In 2021, the income limit for single filers will be $125,000-$140,000, and for married couples filing jointly, the income limit will be $198,000-$208,000.
It’s important to keep in mind that these contribution limits and income thresholds can change from year to year, so it’s always a good idea to stay up-to-date on any changes that may affect your retirement savings plan.
One strategy to maximize your contributions is to set up automatic contributions throughout the year. This way, you can ensure that you’re contributing the maximum amount allowed without having to worry about making a lump sum contribution at the end of the year.
Additionally, if you have extra cash on hand, you may want to consider contributing to a spousal IRA. This allows a non-working spouse to contribute to an IRA based on the working spouse’s income, as long as certain requirements are met.
In conclusion, understanding the contribution limits for IRAs in 2021 is an important part of planning for your retirement savings. By staying informed and taking advantage of strategies like automatic contributions and spousal IRAs, you can maximize your contributions and work towards a secure financial future.
401(k) Contribution Limits for 2021
As we approach the end of 2020, it’s time to start thinking about our financial goals for the upcoming year. One important aspect of financial planning is understanding the contribution limits for retirement accounts. In this article, we’ll focus on the 401(k) contribution limits for 2021.
The IRS has announced that the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will remain unchanged at $19,500 for 2021. This means that if you’re under 50 years old, you can contribute up to $19,500 to your 401(k) plan in 2021.
For those who are 50 or older, the catch-up contribution limit will also remain unchanged at $6,500. This means that if you’re 50 or older, you can contribute up to $26,000 to your 401(k) plan in 2021.
It’s important to note that these contribution limits apply to employee contributions only. Employer contributions, such as matching contributions or profit-sharing contributions, do not count towards these limits. However, there is a combined contribution limit for both employee and employer contributions. For 2021, the total contribution limit (employee and employer combined) is $58,000 for those under 50 years old and $64,500 for those 50 or older.
It’s also worth noting that some employers may have their own contribution limits that are lower than the IRS limits. If this is the case, you won’t be able to contribute more than your employer’s limit, even if you’re under the IRS limit.
So why are contribution limits important? Contributing to a 401(k) plan is one of the easiest and most effective ways to save for retirement. By contributing regularly, you can take advantage of compound interest and potentially grow your savings significantly over time. Additionally, many employers offer matching contributions, which can help boost your savings even further.
However, it’s important to remember that 401(k) plans are subject to market fluctuations and there is always a risk of losing money. It’s important to diversify your investments and consider other retirement savings options, such as IRAs or taxable investment accounts.
If you’re unable to contribute the maximum amount to your 401(k) plan, don’t worry. Any amount you can contribute is better than nothing. Even small contributions can add up over time and help you reach your retirement goals.
In conclusion, the 401(k) contribution limits for 2021 will remain unchanged at $19,500 for those under 50 years old and $26,000 for those 50 or older. Remember that these limits only apply to employee contributions and there is a combined contribution limit for both employee and employer contributions. Contributing to a 401(k) plan is an important part of retirement planning, but it’s important to diversify your investments and consider other savings options as well.