retirement planning

In 2020, we saw the new SECURE Act legislation come about in response to the changing needs of America’s retirees. In 2021, we will likely see some increased retirement account contribution limits and could possibly see additional retirement legislation. For those who have saved diligently over the years, it’s crucial to know how to make the most of those savings. Do you know what’s in store for retirement accounts in 2021?  Here are 3 key areas to look out for as we close out the year.

2021 Contribution Limits

In 2021, workers can contribute $19,500 per year to a 401(k), and those age 50 and older can contribute an additional $6,500 per year.[1] There is no increase from 2020 for 401(k) or IRA contribution limits, which remain at $6,000 per year for workers under age 50 and $7,000 per year for workers age 50 and older.[2] Self-employed workers and small business owners can save up to $58,000 per year in a SEP IRA or a solo 401(k) in 2021, up from $57,000 in 2020.[3] The contribution limit for SIMPLE retirement accounts remains at $13,500.[4] Contributing to a tax-deferred retirement account can help to reduce your tax burden and save for retirement, so know how much you are contributing and if you could contribute more if you are age 50 or older.

Higher Income Phase-Out Ranges for Roth IRAs

There’s evidence to suggest that we might be experiencing historically low tax rates right now. Taxes may go up in the future with the expiration of the Tax Cuts and Jobs Act in 2025, at the latest, and the ballooning national debt.[5] One popular long-term tax minimization strategy is to contribute to or convert to a Roth IRA. A Roth IRA allows you to contribute after-tax dollars and withdraw money tax-free later on. You will pay tax on whatever you contribute or convert. You can withdraw money penalty-free as long as the account has been held for at least five years, and the owner is at least 59 ½ or has a qualifying disability.[6] In 2021, the income phase-out range for those who want to make a Roth IRA contribution will increase from $124,000 to $139,000 in 2020 to $125,000 to $140,000 for single filers, and from $196,000 to $206,000 in 2020 to $198,000 to $208,000 for married couples.[7] You can do a few things if you don’t qualify for a Roth IRA, such as contribute to a Roth 401(k), if your company offers it, or convert part or all of your traditional IRA to a Roth. If your income doesn’t exceed the limits, but you have a spouse who does not earn income, you may be able to contribute to a spousal Roth IRA in addition to your own Roth IRA.[8]

What’s Washington D.C. Talking About? 

A bipartisan bill has been introduced in the House of Representatives that would make changes to 401(k)s, IRAs, and other retirement plans.[9] The bill proposes increasing the Required Minimum Distribution (RMD) age from 72 to 75 and waiving it altogether for those with less than $100,000 in their retirement plans and IRAs at the end of the year before they turn 75. It would also increase the current IRA catch-up contribution limit of $1,000 for workers age 50 and older by making it indexed to inflation while also increasing 401(k).[10] The bill also proposes removing certain (current) limitations on qualified longevity annuity contracts (QLACs), among other points.[11] These potential changes could affect your tax burden in retirement and how you use your savings, so staying on top of the news can really benefit your retirement plan.

It’s important to be aware of policy changes that could affect what’s in store for retirement accounts in 2021 and beyond. Know how much you can contribute to your retirement accounts in 2021 and how the SECURE Act and other potential policy changes could impact your retirement plan. We’re here to help you make updates or start from scratch and create a plan, so come talk to us about your retirement goals and concerns.











Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment loss. As with any investment strategy, there is the possibility of profitability as well as loss.
Investing involves risk including loss of principal. No investment strategy, such as rebalancing, can guarantee a profit or protect against loss. Rebalancing investments may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability.

Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment loss. As with any investment strategy, there is the possibility of profitability as well as loss.

Advisory services offered through Moore’s Wealth Advisory, A Member of Advisory Services Network, LLC. Insurance products and services offered through Moore’s Wealth Management. Advisory Services Network, LLC and Moore’s Wealth Management are not affiliated. Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.