Timothy Sumer

How much can you save for retirement in 2021 in tax-advantaged accounts? How does $58,000 sound? The Treasury Department has announced inflation-adjusted figures for retirement account savings for 2021. The basic salary deferral amount for 401(k) and similar workplace plans remains flat at $19,500; the $6,500 catch-up amount if you’re 50 or older also remains the same; but the overall limit for these plans goes up from $57,000 to $58,000 in 2021. That helps workers whose employers allow special after-tax salary deferrals, and self-employed folks who can save to the limit in solo or individual 401(k)s or SEP retirement plans. For the rest of us, IRA contribution limits are flat. The amount you can contribute to an Individual retirement account stays the same for 2021: $6,000, with a $1,000 catch-up limit if you’re 50 or older. There’s a little good news for IRA savers. You can earn a little more and get to deduct your IRA contributions. Plus, the phase-out income limits for ...

Dear Liz: My husband and I have a combination of traditional and Roth IRAs naming our children and grandchildren as beneficiaries. With the passage of the Secure Act requiring distribution of inherited IRAs within 10 years, we want to revise our plan of leaving all of the investments to our children, as such inherited income would affect their tax bracket also. Do you have recommendations to alter the inherited IRAs to avoid this issue? Our annual fixed income puts us at the top of our tax bracket, meaning we usually cannot manage a traditional IRA to Roth conversion. Answer: The Secure Act dramatically limited “stretch IRAs, ” which allowed people to draw down an inherited IRA over their lifetimes. Now most non-spouse inheritors must empty the accounts within 10 years if they inherited the IRA in 2020 or later. There are some exceptions if an heir is disabled, chronically ill or not more than 10 years younger than the IRA owner, says Mark Luscombe, principal analyst for Wolt...