Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
        • 9 Convincing Reasons Why You Need An Emergency Fund
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
        • Cadre Real Estate Investing Review: Commercial Real Estate Investing
        • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

Traditional And Roth IRA Contribution Limits Announced

By Peter Anderson Leave a Comment - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited October 27, 2020.

Share10
Pin4
Tweet5
Share
19 Shares

A few days ago I wrote a quick post giving full details about what changes we could expect to see in the 2021 401k contribution limits.

So how much was changing?

The short answer is that we saw no change in the contribution limit from last year, it remains at a limit of $19,500.

If you have an IRA in addition to or instead of a company 401k, you’ll want to make sure to stay on top of any increases in contribution limits there as well.

Contribution limits are lower in the IRA than the 401k to begin with, so if an increase happens, be sure to take advantage.

So what is happening with the IRA contribution limits this year?

The IRS has announced that the amount that you can contribute to a traditional or Roth IRA for 2021 will remain unchanged.

Don’t have a Roth IRA yet? Check out these posts talking about the best places to open a Roth IRA, or our list of best robo advisors.

Contribution Limits For Roth & Traditional IRA In 2021

The contribution limit for both Roth and Traditional IRAs will remain the same this year.

If you are under 50 years old that means you can still contribute $6,000 to your IRA accounts, same as last year.

50+ years old?  You’re also able to make a catch up contribution of $1,000 – which pushes the contribution limit to $7,000.

The limit for the Roth and traditional IRA is a shared limit, so keep in mind if you contribute to one, the limit for the other is reduced. The $6,000 is a single combined limit if you want to max out your contributions.

For example, if you contribute $4,000 to your Roth IRA, you could only contribute $2,000 to your traditional IRA (bump that up by $1,000 if you’re over 50).

Here’s a table showing the 2021 Traditional and Roth IRA contribution limits, along with the limits in years past.

YearAge 49 and BelowAge 50 and Above
2002-2004$3,000$3,500
2005$4,000$4,500
2006-2007$4,000$5,000
2008-2012$5,000$6,000
2013-2018$5,500$6,500
2019-2022$6,000$7,000
2023$6,500$7,500

AGI Based Income Phaseouts For Roth IRAs In 2021

Roth IRAs have an income phaseout. What that means is once you reach a certain level of income the amount of you can contribute goes down, and gets completely phased out at the upper level of the range.

For Roth IRAs single taxpayers, head of household, or married filing separately (IF you didn’t live with your spouse during the year) with an annual Modified Adjusted Gross Income (MAGI) over $125,000, you’ll begin to see the allowable contribution drop until at $140,000 it goes away completely. The limits for married filing jointly investors are $198,000-$208,000. Here are the limits:

Roth IRA Income Limits For Contributions (2021)Contributions are reduced if income is above this amountContributions are not available if income exceeds this amount
Single/Married Filing Separate IF you didn't live together during the year.$125,000$140,000
Married Filing Jointly or qualifying widow or widower.$198,000$208,000
Married filing separately IF you lived with your spouse at any point during the year.$0$10,000

So what does this mean in practice?

If your income is less than the number in the first column, you can contribute the full $6,000 for those younger than 50.  If you’re 50 or older you can contribute $7,000.

If your income is higher than the amount in the second column, you aren’t able to contribute to a Roth IRA in 2021, barring something like a back door Roth IRA conversion.

In your income falls neatly into the range above, you can still contribute a prorated amount.

For single taxpayers, for every $1,500 you make above the number in the first column, you’ll lose 10% of your $6,000 max contribution.

For married taxpayers, you’ll lose 10% for every $1,000 in income above the first column amount.  Here’s an example of how this looks from Motley Fool:

As an example, say that you’re 48, married, and have a joint income of $205,000. Looking at the chart above, your income exceeds the $193,000 lower threshold by $7,000. At a rate of 10% per $1,000, that means that you’ll lose 70% of your contribution. For someone younger than 50 with a maximum of $6,000, the reduction will be $4,200, leaving you with a final allowable contribution of $1,800.

Contributions Can Be Made Until Tax Day 2021 For 2020!

If you have a Traditional IRA or Roth IRA, one thing a lot of people don’t realize is that the time to contribute to your account doesn’t end when the clock strikes midnight on December 31st. In fact, if you haven’t contributed the allowed contribution amount by December 31st, you have all the way until tax day to contribute to your account for the previous year.

In fact, you can still open a Roth IRA or a traditional IRA and contribute the fully allowed amount up until tax day. Tax day for 2021 will fall on Thursday, April 15th, 2021. So not only can you contribute at the end of this year, you can contribute right up until your taxes are due!

If you do make a contribution in 2021 before tax day, make sure you specify which tax year the contribution is being made for.

Keeping Tabs On Limits And Phaseouts

When you’re contributing to a Roth or Traditional IRA you’ll want to keep an eye on the limits and phaseouts.

If your income is reaching phaseout thresholds, you may want to consider reducing your taxable income by contributing to an account like a 401k, or reducing your taxable income by making charitable contributions, etc so that you can continue to be eligible for the account type.

Are you increasing your contributions this coming year, even though the limits haven’t increased?

Traditional And Roth IRA Contribution Limits Announced

Related Posts

  • 401k Contribution Limits And Rules

    The IRS has released their 401k contribution guidelines for the 2021 tax year. How much can you contribute to your retirement account in 2021?

  • 3 Things To Remember About Roth IRAs

    There's been a lot of talk about Roth IRAs this year. Some folks still aren't sold on them - and of course no one particular…

  • Choosing Between Retirement Accounts: Traditional IRA, Roth IRA And 401k

    Administrative note: This article assumes that you're familiar with the basic differences between a traditional IRA, a Roth IRA, and a 401(k). If you're not,…

Share10
Pin4
Tweet5
Share
19 Shares
Last Edited: 27th October 2020 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Investing

About Peter Anderson

Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don't forget to say hi on Pinterest, Twitter or Facebook!

Share Your Thoughts: Cancel reply

Previous Post: 401k Contribution Limits And Rules
Next Post: Health Savings Account (HSA) Contribution Limits And Out Of Pocket Maximums
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • How To Save $100k In 7 Practical Steps
  • How to Save Money When Remodeling A Home
  • How To Hire A Contractor For Your Remodeling Project
  • Remembering 9/11 Years Later: Where Were You On That Fateful Day?
  • TradeStation Review: Commission Free Stock And ETF Trades
  • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
  • Cadre Real Estate Investing Review: Commercial Real Estate Investing
  • Best Sites Like Fiverr To Make Money As A Freelancer
  • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
  • 30 Quotes About Easter And Resurrection: He Is Risen!

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2023 · Bible Money Matters | Sitemap | Advertise | Privacy Policy