Welcome to the midway point of the year. As we are heading into the final months of the year, checking in on tax-saving strategies is always a good idea.
Below is a list of some of our most frequently asked limits for Contribution Accounts.
2021 Deferral Limits:
Retirement Savings Accounts:
401ks/403bs/most 457 plans/Thrift Savings Plans: The 2021 annual contribution limit is left unchanged at $19,500. Workers aged 50 and older can make “Catch-Up Contributions” for an additional $6,500, for a total contribution of $26,000.
Traditional IRA/Roth IRAs: The 2021 annual contribution limit is left unchanged at $6,000. If you are over the age of 50, you can make an additional “Catch-Up Contribution” of $1,000, for a total of $7,000. Please work with a CPA or your Tax Software Provider to determine maximum income levels for deductible contributions to Traditional IRAs, and any income phase-out limits for Roth and Traditional IRAs.
Health Savings Accounts:
The annual limit on HSA contributions for 2021 will be $3,600 for self-only and $7,200 for family coverage, which is about a 1.5 percent increase from the 2020 limits. This represents an increase of $50 for self-only coverage and $100 for family coverage compared to 2020. See if your workplace offers an insurance plan that you could combine with a Health Savings Account or consider buying one for yourself if you purchase your own coverage (*must be a High Deductible Health Plan).
Gift Tax Exclusion: The annual gift tax exclusion remains unchanged at $15,000 per individual ($30,000 joint) to prevent the need to file a gift tax return.
While there are other accounts/strategies not mentioned on this list, this tends to be the most frequently asked about in our practice.