Tag Archives: maximum contribution

2021 Retirement Contribution Limits – Most Popular No Changes!

With 2019 Taxes delayed filing to mid year this year 2020, it seems like tax season was a constant over the last 4-6 quarters. Add to that, there was a COLA (Cost of Living Adjustment) from 2019 to 2020 but not very many changes from this year, 2020 and next tax year 2021 and it seems like a puzzle.

Not to worry, here are the few changes from 2020 to 2021, again the most popular (bolded) by a long shot had very little adjustments

Limits on Benefits and Contributions20212020
401(k), 403(b), and 457 Plan Elective Deferrals$19,500$19,500
Defined Contribution Plans$58,000$57,000
Defined Benefit Plans$230,000$230,000
SIMPLE Plan Elective Deferrals$13,500$13,500
IRA$6,000$6,000
ROTH$6,000$6,000
“Highly Compensated” Definition$130,000$130,000
“Key Employee” Definition
Officer$185,000$185,000
1% Owner$150,000$150,000
Security Taxable Wage Base$142,800$137,700
Catch Up Contributions Age 50 And Older
401(k), 403(b), and 457 Plans$6,500$6,500
SIMPLE Plans$3,000$3,000
IRA$1,000$1,000
ROTH$1,000$1,000
Source https://definiti-llc.com/ and IRS.Gov/Retirement

Note, there are limitations on certain deductions from above as well as income oriented phase outs, please check with your tax professional for your specific sitiation.

Have a Great “New Deferral Limits” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

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Are You Caught Up? Those of us 50 Years of Age or Older? – Another End of the Year Tax Tip

Under current tax laws, if you do not have outside restrictions (see below), you should be able to contribute $22,000 to your company 401k if you are 50 years of age or better.

According to the IRS’s current Catch Up contribution rules individuals age 50 or over are able to contribute an extra $5500 into their 401k retirement plans, bringing the total for 2011 from $16,500 to $22,000 (2012: $17,000 to $22,500.)

If you fall into this young age category, take a peek at your latest paycheck to confirm “YTD Deferrals Into 401k” is either close, or at the above mentioned maximum.

If not, here are a few items you may want to know:

  1. You may be limited by highly compensated issues that override your ability to defer the max into the plan, you can call HR to confirm.
  2. Your employer may have forgotten to up your maximum (make a call to HR to confirm.)
  3. If you are short, and can put more money into the plan, ask your employer if you can defer an extra amount over the next several pay periods. (I apologize, it is the holiday season, but it will help the numbers at tax time next year.)
  4. If you are short, and cannot fill up the plan this year, not to worry, just let HR know you would like to be sure and make a maximum contribution for next year. Better eventually, than never, and be sure to spread that deferral evenly throughout the year!

We hope you enjoyed another tax saving tip. We understand many of these tips are very near the end of the year, however, we often find this information is more receptive to us all at this time. OH, and again, we are not recommending tax advice, as each situation is different.

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com