The IRS has released its 2021 cost-of-living-adjusted limitation amounts for tax-qualified retirement plans and IRAs. Read on for a summary of the most important updates.
Tax-qualified retirement plans
- Defined benefit plan annual accrual limit – unchanged at $230,000.
- Defined contribution plan annual addition limit – increased from $57,000 to $58,000.
- Elective deferrals annual limit – unchanged at $19,500.
- Annual compensation limit – increased from $285,000 to $290,000.
- Compensation threshold for top-heavy plan “key employee” status – unchanged at $185,000.
- Compensation threshold for “highly compensated employee” status – unchanged at $130,000.
- Dollar limit for catch-up contributions for individuals aged 50 or over – unchanged at $6,500.
- Contribution limit for SIMPLE retirement accounts – unchanged at $13,500.
- Annual Section 457(b) plan limit – unchanged at $19,500.
- Annual maximum deductible amount for traditional IRA contributions – unchanged at $6,000.
- Dollar amount for determining deductible amount of traditional IRA contributions
- For active participants in an employer retirement plan filing a joint return or as a qualifying widow(er) – increased from $104,000 to $105,000.
- For all others who are active participants in an employer retirement plan (other than married taxpayers filing separate returns) – increased from $65,000 to $66,000.
- Adjusted gross income limit for determining deductible amount of a traditional IRA contribution for a taxpayer who is not an active participant in an employer retirement plan but whose spouse is – increased from $196,000 to $198,000.
- Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions
- For single individuals and heads of household who are active participants in an employer retirement plan – increased from $65,000-$75,000 to $66,000-$76,000.
- For married couples filing jointly where the spouse who makes the traditional IRA contribution is an active participant in an employer retirement plan – increased from $104,000-$124,000 to $105,000-$125,000.
- For traditional IRA contributions by an individual who is not an active participant in an employer retirement plan but whose spouse is – increased from $196,000-$206,000 to $198,000-$208,000.
- Adjusted gross income limit for determining maximum Roth IRA contributions
- If married and filing jointly or if filing as a qualifying widow(er) – increased from $196,000 to $198,000.
- For all others (other than married taxpayers filing separate returns) – increased from $124,000 to $125,000.
- Adjusted gross income phase-out range for contributions to a Roth IRA
- For married couples filing jointly – increased from $196,000-$206,000 to $198,000-$208,000.
- For singles and heads of household – increased from $124,000-$139,000 to $125,000-$140,000.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
InsightIRS: Amounts used as ‘payroll costs’ in 2020 PPP loan forgiveness applications are ineligible for retroactive 2020 Employee Retention CreditsDana FriedEmployers retroactively eligible for 2020 Employee Retention Credits (ERCs) will be held to the Payroll Costs reported on their PPP loan forgiveness applications.
InsightTop considerations for for-profit recipients of Provider Relief Funds: Reporting, compliance, tax impacts, and moreSteven SchwartzLearn when and how to report on use of the federal COVID-19 healthcare funding, the tax and Single Audit implications, and other information for providers.
InsightNew law permits PPP loan recipients to obtain Employee Retention Credits, extends and expands ERC for 2021Dana FriedRead how ERC requirements have changed for 2021, including what counts as qualified wages, who is an eligible employer, the maximum credit amount, and more.
InsightHow individual and business tax rates, credits, and more could change under the Biden presidencyJoe Biden has proposed or supported changes across the tax landscape. Read a summary of notable ones that could impact individuals and businesses.
InsightTreasury and IRS release final regulations on treatment of carried interestMoshe Biderman, Jonathan R. Collett, Robert Richardt, Mark PapaThe new regulations include substantial taxpayer-friendly modifications. In a newly published article for Bloomberg Tax, CohnReznick’s Moshe Biderman, Jonathan R. Collett, Robert Richardt, and Mark Papa break down the regulations.