Table of Content
- Traditional & Roth IRA Contributions and Deadlines
- SIMPLE IRA Contributions and Deadlines
- SEP IRA Contributions and Deadlines
- HSA Contributions and Deadlines
- ESA Contributions and Deadlines
- Spousal IRA Contributions and Deadlines
Last updated on December 11th, 2020
Written by: Rick Pendykoski
1. Traditional & Roth IRA Contribution and Deadlines
Traditional & Roth IRA Contribution Deadlines
- Tax-year 2020 deadline is April 15th, 2021
- Tax-year 2021 deadline is April 15th, 2022
In 2019 and 2020, the annual contribution limit for Roth and traditional IRAs is:
- Under age 50: $6,000 (remaining unchanged from 2020).
- Age 50 or older: $7,000 (remaining unchanged from 2020).
Traditional IRA Income Deduction Limits for 2020 and 2021
| Filing status | 2020 Full deduction if modified AGI is … | 2020 Partial deduction if modified AGI is … | 2020 No deduction if modified AGI is … | 2021 Full deduction if modified AGI is … | 2021 Partial deduction if modified AGI is … | 2021 No deduction if modified AGI is … |
| Married filing jointly and you’re covered by retirement plan at work | $104,000 or less | More than $104,000 but less than $124,000 | $124,000 or more | $105,000 or less | More than $105,000 but less than $125,000 | $125,000 or more |
| Married filing jointly and your spouse is covered by a retirement plan at work | $196,000 or less | More than $196,000 but less than $206,000 | $206,000 or more | $198,000 or less | More than $198,000 but less than $208,000 | $208,000 or more |
| Single or head of household and you are covered by a retirement plan at work | $65,000 or less | More than $65,000 but less than $75,000 | $75,000 or more | $66,000 or less | More than $66,000 but less than $76,000 | $76,000 or more |
| Married filing separately and you or your spouse is covered by a retirement plan at work | The full deduction isn’t available | Less than $10,000 | $10,000 or more | A full deduction is not available | Less than $10,000 | $10,000 or more |
| Single, head of household, qualifying widow(er), married filing jointly or separately and neither spouse is covered by a plan at work | Any amount |
Roth IRA Income Contribution and Deduction Limits for 2020 and 2021
| Filing status | 2020 Modified AGI | 2020 Maximum Contribution | 2021 Modified AGI | 2021 Maximum Contribution |
| Married filing jointly or qualifying widow(er) | Less than $196,000 | $6,000 ($7,000 if 50 or older) | Less than $198,000 | $6,000 ($7,000 if 50 or older) |
| $196,000 to $205,999 | Contribution is reduced | $198,000 to $208,000 | Contribution is reduced | |
| $206,000 or more | Not eligible | $203,000 or more | Not eligible | |
| Single, head of household or married filing separately (if you did not live with spouse during year) | Less than $124,000 | $6,000 ($7,000 if 50 or older) | Less than $125,000 | $6,000 ($7,000 if 50 or older) |
| $124,000 to $138,999 | Contribution is reduced | $125,000 to $140,000 | Contribution is reduced | |
| $139,000 or more | Not eligible | $137,000 or more | Not eligible | |
| Married filing separately (if you lived with spouse at any time during year) | Less than $10,000 | Contribution is reduced | Less than $10,000 | Contribution is reduced |
| $10,000 or more | Not eligible | $10,000 or more | Not eligible |
What is “Earned Income”?
IRA contributions are made with “earned income,” which you can get in two ways: either by working for someone or running/owning your own business.
Earned income includes money from salaries, wages, commissions, tips, bonuses, and self-employment income.
Note: IRS considers disability retirement benefits as earned income until you reach the age at which you would have received annuity or pension if you weren’t disabled.
What is Modified AGI?
The modified adjusted gross income (MAGI) determines your eligibility for important tax benefits and whether you can make tax-deductible contributions to IRAs. This MAGI number is likely to be close or identical to your adjusted gross income (AGI). It takes your AGI and adds back certain deductions, including:
- IRA contributions and Social Security
- Half of any self-employment taxes
- Passive income or loss
- Losses from a publicly traded partnership
- Rental losses
- Qualified tuition expenses
- The exclusion for adoption expenses
- Student loan interest
- The exclusion for income from U.S. savings bonds
- Tuition and fees
Exceptions to IRA contribution limits
- You cannot contribute more than you earn. For example, if your taxable compensation for the year is $5,000, that’s also your IRA contribution limit.
- If you’re nonworking and your spouse makes enough money to cover the IRA contributions, you can have spousal IRA. So, if you both are under age 50 and want to contribute the maximum to an IRA, your spouse needs to earn at least $12,000 in 2020 to cover the $6,000 annual maximum contribution for each of you.
Excess IRA contribution
An excess IRA contribution happens in these situations:
- When you contribute more than the contribution limit.
- When you make an improper rollover contribution to an IRA.
- When you make a regular IRA contribution to a traditional IRA at age 70½ or older for 2019, or earlier.
Excess IRA contributions attract a tax of 6% per year for as long as the excessive amount stays in the IRA. However, the tax applied cannot exceed 6% of the combined value of all your IRAs as of the end of the tax year.
You can avoid excess IRA contributions by:
- Withdrawing the excess contribution (and income earned on the excess contribution) from your IRA before the April tax deadline. But, if you’ve already filed your tax return, withdraw the excess contribution (and income earned on the excess contribution), and file an amended tax return by the October deadline.
2. SIMPLE IRA Contributions and Deadlines
SIMPLE IRA Employee Contribution Deadlines
- Employee contributions (deferrals) are due within 7 business days after the amount is deducted from their pay.
SIMPLE IRA Employer Contribution Deadlines
- Employer contributions are due by the employer’s tax return date plus extensions.
SIMPLE IRA Employee Contribution Limits
| 2020 | 2021 | |
| Employee elective deferrals | $13,500 | $13,500 |
| Catch-up elective deferral contribution for age 50+ | $3,000 | $3,000 |
SIMPLE IRA Employer Contribution Limits
The employer can elect from two different contribution methods. The employer can either:
- Match an employee’s salary reduction contributions on a dollar-for-dollar basis, up to 3% of the employee’s compensation.
OR
- Make non-elective contributions of 2% of each eligible employee’s contribution.
Lower percentage
An employer may choose to reduce the 3% matching contribution, but under a few conditions:
- The limit must be at least 1%.
- The limit is reduced for not more than 2 years out of 5 years.
- The employer must notify the employees of the reduced match much in advance before the 60-day election period for the calendar year.
Non-elective contributions
If the employer chooses to make non-elective contributions of 2% of each eligible employee’s compensation, it must make non-elective contributions irrespective of whether or not the employee opts to make salary reduction contributions. An employee’s compensation up to $290,000 for 2021 and $285,000 for 2020 is considered while determining the contribution limit.
Important note: The employer can choose to make non-elective contributions of 2% over matching the contribution only if:
- The employer informs the eligible employees about choosing non-elective contributions of 2% instead of matching the contribution, and
- This notification is provided within a reasonable period before the 60-day election period for the calendar year.
3. SEP IRA Contributions and Deadlines
SEP IRA Deadlines
- For 2020, Business tax filing deadline, plus extensions
- For 2021, Business tax filing deadline, plus extensions
SEP IRA Contribution Limits
| 2020 | 2021 | |
| Defined contribution maximum deferral (employer/employee combined) | Up to 25% of compensation, with a maximum of $57,000 | Up to 25% of compensation, with a maximum of $58,000 |
| Age 50 Catch-Up Limit | $6,500 | $6,500 |
4. HSA Contributions and Deadlines
HSA Contribution Deadlines
- Tax-year 2020 deadline is April 15th, 2021
- Tax-year 2019 deadline is April 15th, 2020
HSA Contribution Limits
| 2020 | 2021 | |
| Maximum limit self-only coverage | $3,550 | $3,600 |
| Maximum limit family coverage | $7,100 | $7,200 |
| Age 55 Catch-Up Limit (If more than 1 person in the Family Plan is over age 55, then an additional account has to be created for making catch-up contribution) | $1,000 | $1,000 |
| HDHP (High Deductible Health Plan) minimum annual deductible self-only coverage | $1,400 | $1,400 |
| HDHP minimum annual deductible family coverage | $2,800 | $2,800 |
| HDHP maximum out of pocket self-only coverage | $6,900 | $7,000 |
| HDHP maximum out of pocket family coverage | $13,800 | $14,000 |
5. ESA Contributions and Deadlines
ESA Contribution Deadlines
- Tax-year 2019 deadline is April 15th, 2020
- Tax-year 2020 deadline is April 15th, 2021
ESA Contribution Limits
| 2020 | 2021 | |
| Per year contribution limit until the child reaches age 18 and unless the child has special needs | $2,000 | $2,000 |
6. Spousal IRA Contributions and Deadlines
Spousal IRA Contribution Deadlines
- For 2020, the contribution deadline is until April 15, 2021
- For 2019, the deadline is April 15, 2020
Spousal IRA Contribution Limits
| 2020 | 2021 | |
| Individual spouse contribution limit | $6,000 | $6,000 |
| Catch-up contribution of individual spouse for age 50 or older | $1,000 | $1,000 |
| Total contribution limit for married couple | $12,000 | $12,000 |
| Total catch-up contribution for married couple age 50 or older | $2,000 | $2,000 |
