Key Retirement Savings Figures Unchanged for 2021

Here’s the reason some key retirement contribution figures didn’t change for 2021.

Once upon a time, inflation went hand-in-hand with tax increases. Wages and prices would rise while tax brackets and deduction limits remained unchanged. The same amount of real, inflation-adjusted income would produce a higher payment to the IRS. Taxpayers would fall behind while standing still.

Nowadays we get annual adjustments in most tax figures. Some of these numbers stay the same because of rounding rules, however. They may go up only when accumulated inflation is enough to push them over the next $500 increment, for example.

This is what happened to the key retirement savings figures for 2021. The IRA contribution limit remains at $6,000 ($7,000 if age 50 or older). The ceiling on contributions to 401k and similar plans, including the Thrift Savings Plan for federal employees, stays at $19,500, with the 50-and-over catch-up contribution capped at $6,500. Inflation wasn’t enough to budge the $13,500 limitation for SIMPLE retirement accounts.

Aggressive savers will be disappointed to see these figures repeat for 2021. Look at the bright side, though. We’re stuck on these numbers because of historically tame inflation ⚊ and when it comes to retirement savings, that’s a Very Good Thing.

More retirement plan figures, and other inflation adjustments, are available in our Reference Room.

Roth IRA Contributions

How well do you know Roth IRA contributions? Learn how the income limitation works, how to get around that limitation with a backdoor contribution, and limitations on that technique. Is there really such a thing as a spousal IRA? What about Roth IRAs for minors? Is it possible you’ve overlooked the retirement savings contribution credit? Our pages dealing with contributions to Roth IRAs have been updated to reflect changes in the law that took effect in 2018.

detailsContributions to Roth Accounts