Contribution Limits Increased
If you participate in a SIMPLE IRA through your employer, it’s worth noting that these contribution limits adjusted as well from $13,000 to $13,500.
If you do not have access to an employer-sponsored retirement plan or you invest in your own personal IRA or Roth IRA, the limit on these retirement accounts increased as well from $5,500 to $6,000.
Income Limits for a Tax-Deduction
For example, if you are covered by a workplace retirement plan, you may not be able to deduct as much as someone who is not covered by a workplace retirement plan even if your income is within the same range.
This income range, however, is what has been raised in 2020 allowing more people to qualify for a deductible contribution to a Traditional IRA. It’s best to review these income limits with your financial advisor or tax professional.
Roth IRA Income Limits
Income ranges for eligibility in making Roth IRA contributions were increased for 2020 as well. Some key points to keep in mind here are:
- Single Taxpayers: Can make the maximum $6,000 annual contribution if their Modified Adjusted Gross Income (MAGI) is $124,000 or less. If MAGI is between $124,000 and $139,000 they can make a partial contribution and anything over $139,000, no contribution is allowed.
- Married Filing Jointly: Can make the maximum $6,000 annual contribution if their MAGI is less than $196,000. If MAGI is between $196,000 and $206,000 they can make a partial contribution. Of course, anything above $206,000 a contribution is not allowed.
Take Advantage of Increases
Need help deciding where or how much to save? Consider working with me to help you prioritize achieve your goals.