Pinnacle Personnel Services, LLC | Debbie Hatch
PLAIN & SIMPLE: Here’s what that means.
Employees under age 50 who participate in a retirement savings account at work can contribute up $19,500 next year. Employees beginning with the year they turn 50 (they don’t “actually” have to be 50) or older can contribute up to $26,000
The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit to an IRA for individuals aged 50 and over remains $1,000. That said, if during the year either the taxpayer or his/her spouse was covered by a retirement plan at work, the amount one can put into an IRA may be reduced or phased out. Phase out ranges have changed for 2020:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000-$75,000 (an increase of $1,000 over 2019).
- For married couples filing jointly, the range is $104,000 to $124,000 (again, an increase of $1,000).
- For an IRA contributor who is not covered by a workplace retirement plan but who is married to someone who is covered, the deduction is phased-out if the couple’s income is between $196,000 and $206,000 (an increase of $3,000).
- For a married individual filing separate returns, the phase-out range remains $0 – $10,000
Source documentation is Section 219(g)(3)(B)(i) of the United States Tax Code.
The adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return is increased by $3,000 to $196,000. The adjusted gross income limitation for all other taxpayers (other than married taxpayers filing separate returns) is increased by $2,000 to $124,000. The applicable dollar amount under for a married individual filing a separate return remains $0.
PLAIN & SIMPLE: Here’s what that means: