As we reach the close of 2020 some people wonder what their retirement contribution limits are.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $19,500, However if you are aged 50 years or older you catchup contribution is $6500 allowing an employee to contribute up to $26,000 in one of the above mentioned plans.
The limits for a SIMPLE retirement plan is $13,500
Both Roth and Tradional IRA limits are $6000 and for those aged 50 or over they are $7000.
For those of you that want to contribute to multiple retirement plans there are sometimes income limitations as well as contribution limitations.
For instance, 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 2020.
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $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 $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 $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 $0 to $10,000.The income phase-out range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and head of households. For married couples filing jointly, the income phase-out range is $196,000 to $206,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is $0 to $10,000.There are also contribution limits as well. The annual contribution limit is $57,000 for 2020. The amount you can defer to all your plans (not including 457(b) plans) is $19,500 in 2020 . This is your Elective Deferral Limit. But what would happen if you work a fulltime job and max out your elective deferral to your 401(K) plan and also have a business in which you earn nonemployee compensation? You may have a retirement plan for your business and make non-elective deferrals up to $57,000( depending on income earned.
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