How much can I save in tax advantaged accounts in 2021?
Recently released, the 2021 retirement accounts details!
The good news – there are some income limit bumps for increased/inflation-adjusted access to traditional and Roth IRA contributions.
The bad news – if you’re a super saver, maxing out all of your retirement accounts in 2020, there’s no room for growth here for you in 2021.
More specifically, there are no changes in retirement account contribution limits. There’s also no change in the Highly Compensated Employee threshold (this is a good thing if you’re in a non-profit, a bad thing if you’re in the corporate world). And the income phase out range for IRA/Roth IRA contributions got a small bump.
Also relevant for 2021, but having already been out for a while, are the HSA Contribution Limits: The 2021 HSA contribution limit will be $3,600 for individuals (up from $3,550 in 2020), and $7,200 for families (up from $7,100 in 2020).
If you’re a high earner, or live in a high cost of living area, you may also contend with the Social Security wage base. That’s the amount of wages you earn (across all jobs) that’s subject to a 6.2% tax that goes towards funding Social Security. You’ll see it went up more than the other items, it’s based on a different inflation factor – the national average wage index. It also has a different minimum increment ($300, instead of $500), and it is not allowed to go down in subsequent years.
And if you’re drawing Social Security, for 2021 you get a 1.3% cost of living adjustment (COLA) on those checks.
| 2020 | 2021 | |
| Traditional/Roth 403b/401k/457b contribution | ||
| < 50 | $19,500 | Same |
| >= 50 | +$6,500 | Same |
| Highly Compensated Employee threshold | $130,000 | Same |
| Traditional / Roth / backdoor Roth IRA contribution | ||
| < 50 | $6,000 | Same |
| >= 50 | +$1,000 | Same |
| Health Savings Account (HSA) contribution limits | ||
| Individuals, < 55 | $3,550 | $3,600 |
| Individuals, >= 55 | +$1,000 | |
| Families, < 55 | $7,100 | $7,200 |
| Families, one spouse >= 55 (if it’s the 2nd spouse, needs a separate HSA) | +$1,000 | Same |
| Families, both spouses >= 55 (2nd spouse needs a separate HSA) | +$2,000 | Same |
| Social Security wage base | $137,000 | $142,800 |
| Social Security COLA | +1.6% | +1.3% |
Now that you know the lay of the land for 2021, while you may not know your own situation quite yet, do the best you can to take as much advantage of these buckets as you can.
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