The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2021.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2021:
For single taxpayers covered by a workplace retirement plan, the phase-out range is $66,000 to $76,000, up from $65,000 to $75,000. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $105,000 to $125,000, up from $104,000 to $124,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $198,000 and $208,000, up from $196,000 and $206,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
IRS.gov
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Hi Travis! Thank you for the video and sharing your knowledge. Question if someone made $300,00 as sole owner of a LLC acting as S corp for tax purposes is there any benefit to doing solo K over SEP IRA since you max the $58K contribution limit for 2021?
You can still contribute if you make a billion dollars a year, you just can’t deduct
There is NO limit to contributing to an IRA in my understanding. There is a limit for deduction but not contributing? Correct?
So is it safe to say that if you don't know if you'll be above or below these limits, you shouldn't contribute until after tax year is over to know what you made? Also, if someone is over the limit and contributed to a traditional before knowing they were over, what should they do and what would happen?
Hi Travis, I am married filing jointly and my spouse is not working. I have 401k that has no employer contribution in my organization. Please guide me which Phase-out range I will fall under.
Is it safe to assume that if a single guy has workplace plan and salaried more than 76K is not eligible to invest in Traditional IRA?
If status is Married Filling Jointly
Spouse 1 is in an employer sponsored retirement plan
Spouse 2 is not in an employer sponsored retirement plan
So for spouse 1 the phase out limit for 2021 will be 105000 to 125000
And for spouse 2 the phase out limit for 2021 will be 198000 to 208000
Am i correct ?
Great content
Why does these limits exist?
Thx for your explanation
What about the SEPIRA if you have a business
Are the married numbers that you presented based on what an individual makes or is it combined?
Spose who earn income 120k per year is not able to contribute in IRA for tax credit but wife can contribute for tax credit?
Me, just here researching the Irish republicanism and I’m still captivated
How do we calculate MAGI? Is that salary subtracting traditional 401k contributions?
Excellent video! However, I was looking for married filing jointly where neither spouse has a work-based plan, can you please give me some guidance on income caps and phase outs in this scenario? Thank you
Really one question- if wife and husband working. One has 401k plan at work , is there anything like primary person in tax filing ,???? I am confused , these numbers are joint income MAGI right , ? Please help