Every fall, the IRS announces changes to certain key financial figures for the upcoming year, based on the Consumer Price Index as of September 30. Here are a few of the highlights:
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $19,500. The “catch-up” adjustment for those over age 50 also remains unchanged at $6,500. The total limit for those over age 50 remains $26,000.
The contribution limits for Traditional and Roth IRAs remains unchanged at $6,000. The “catch-up” adjustment for those over age 50 also remains at $1,000, thus making the total contribution limit to be $7,000 for those over age 50.
The IRS also announced that the basic Federal exclusion amount for decedents who die in 2021 will increase to $11,700,000 ($11,580,000 in 2020). The annual exclusion for gifts for 2021 will remain at $15,000.
The Social Security Administration announced there will be a 1.3% increase in Social Security benefits for 2021. The maximum amount of earnings subject to Social Security tax also will increase to $142,800.
The maximum Social Security benefit for a worker retiring at full retirement age in 2021 will be $3,113 per month.
On November 6, the Center for Medicare and Medicaid (CMS) announced premiums for Medicare Part B for 2021 will be increasing $3.90 a month to $148.50. The annual deductible for Medicare Part B beneficiaries is increasing $5 to $203.
Beneficiaries whose modified adjusted gross income exceeds $88,000 ($176,000 for married filing jointly) will pay a higher Part B premium. The amounts are tiered with a maximum Part B premium of $504.90 a month for beneficiaries whose modified gross income exceeds $500,000 ($750,000 for married filing Joint tax return).
Contact an Access Wealth advisor to discuss how these numbers impact your tax planning strategies.