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.