Every year, the IRS takes a fresh look at contribution limits and makes changes as necessary. Below are some of the more significant changes for 2020:
Income ranges for eligibility to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the saver’s credit all increase in 2020. You can deduct contributions to a traditional IRA if you meet certain conditions. If during the year either you or your spouse is covered by a retirement plan at work, the deduction is reduced or phased out until it’s eliminated, depending on filing status and income.
Here are the phaseout ranges for 2020:
The income phaseout range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and heads of household, up from $122,000 to $137,000. For married couples filing jointly, the income phaseout range is $196,000 to $206,000, up from $193,000 to $203,000. The phaseout range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of households, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000.
This is just an introduction to a complex topic. To find out how these changes affect you, consult with a professional.
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