Retirement Planning
Zoe Team
5 min read
Meet your 401(k) contribution deadline by year-end to maximize tax savings on your 2020 return.
COVID-19 relief allows penalty-free withdrawals up to $100k from 401(k) or IRA accounts.
2021 brings higher income phase-out ranges for IRA deductions and Saver’s Credit eligibility.
The contribution limit for 401(k) plans in 2020 is $19,500, with an additional $6,500 catch-up contribution available for those age 50 and older.
Yes, the CARES Act allows individuals to skip their required minimum distributions for 2020 without penalty.
It provides a credit of 10%, 20%, or 50% on retirement contributions for lower-income individuals, up to $1,000 for singles and $2,000 for couples.
Understand the changes that 2020 has brought for retirement, taxes and savings due to the global pandemic, and the presidential election.
Saving for retirement can be stressful enough, and then you get hit by a global pandemic. Facing Covid’s worldwide pandemic and a presidential election that can change the tax code in the same year has left many people reevaluating their financial situations. As you continue to plan and save for our future, it is important to understand the changes that 2020 has brought and what can best on the horizon in 2021.
Every dollar you contribute to your 401(k) account in 2020 can save you money on your 2020 tax return. Still, to save as much as possible, you should do your best to make sure you meet the contribution deadline!
The contribution limit for 401(k) plans in 2020 is $19,500, and those that are 50 or older can contribute an additional $6,500 catch up contribution. Contributions to a 401(k) account are due by the end of the calendar year, so it is crucial that you contribute the maximum amount possible before the end of the year. By doing so, you can save as much as possible on your 2020 tax return. If you contribute via payroll, do note that it sometimes takes one to two pay periods for a company to process the contribution. So you should plan to reach the contribution limit before your last pay period of the year.
sThose affected by the COVID-19 pandemic can withdraw $100,000 from a 401(k) or IRA between January 1, 2020, and December 31, 2020, without facing the 10% early withdrawal penalty. To qualify for this relief distribution, you, a spouse, or a dependent must have tested positive and been diagnosed with COVID-19, or you must have experienced financial hardships as a result of the pandemic. Relief distributions from tax-deferred accounts will be subject to income tax; fortunately, it can be paid over a three-year period.
Each year after age 72, required minimum distributions from 401(k) plans and traditional IRAs must be taken by December 31. If an individual does not take the required minimum distribution, there is a penalty of 50% of the amount that should have been withdrawn, plus income tax on the distribution. However, a provision in the CARES Act allows individuals to skip their required minimum distribution in 2020 with no penalty. Those who do not need the money can leave the funds in their retirement account.
On October 26, 2020, the Internal Revenue Service (IRS) released Notice 2020-79, which announced the cost-of-living adjustments and other changes that affect retirement contributions for the 2021 tax year. Understanding these new changes will be very helpful to retirement savers in adjusting their retirement savings accordingly.
The contribution limit for 401(k), 403(b), and other 457 plans remains at $19,500 for 2021. The catch-up contribution limit remains at $6,500, making the contribution limit for those 50 and older at $26,000. The overall contribution limit (the combined employee and employer deposits,) has increased from $57,000 to $58,000 or $64,500 for those 50 or older.
Because the compensation limit has increased from $285,000 to $290,000 once an employee’s salary reaches $290,000, they are no longer able to receive an employer’s match to their deposits. Due to this, the plan can elect to stop the employee’s salary deferrals as well.
The annual contribution limit for IRAs remains at $6,000, and the catch-up contribution limit remains at $1,000 for individuals that are 50 or older. Although these contribution limits did not change, the phase-out ranges for IRA contribution deductions have increased for 2021.
Taxpayers can deduct traditional IRA contributions each year on their tax returns. If an employer-sponsored plan covers the IRA contributor or their spouse, the deduction amount is phased-out, based on their filing status and income. The changes to the phase-out ranges for 2021 are as follows:
For single taxpayers also covered by a workplace retirement plan, the phase-out range increased from $65,000 - $75,000 to $66,000 - $76,000.
For a married individual that files a separate return and is covered by a workplace retirement plan, the phase-out range remains $0 - $10,000.
For married couples filing jointly (where the spouse making the IRA contribution is covered by a workplace retirement plan) the phase-out range increased from $104,000 - $124,000 to $105,000 - $125,000.
For married couples filing jointly, where the IRA contributor is not the one covered by a workplace retirement plan, phase-out range is based on the couple’s combined income. The phase-out range increased from $196,000 - $206,000 to $198,000 - $208,000
The deduction phase-out ranges also increased for Roth IRAs. For single and head of household contributors, the phase-out range increased from $124,000 - $139,000 to $125,000 - $140,000. For married couples filing jointly, the range increased from $196,000 - $206,000 to $198,000 - $208,000, and for a married contributor that files a separate return, the range remains from $0 - $10,000.
As a way to encourage and help lower income individuals save for retirement, the IRS offers the “Saver’s Credit,” also known as the Retirement Savings Contribution Credit. This credit can be worth 10%, 20% or 50% of your retirement contributions depending on your filing status and your adjusted gross income. The credit is worth a max of $1,000 for individuals and $2,000 for joint filing couples.
The income limit for the Saver’s Credit has increased for 2021, climbing from $65,000 to $66,000 for joint filing couples, from $48,750 to $49,500 for heads of household, and from $32,500 to $33,000 for singles and married individuals that file separately.
As 2020 comes to an end and you begin the new year, it is important that your financial plans adapt and change with all of these new rules. Planning with a financial advisor can help you evaluate your financial goals and find the best courses of action to ensure that you achieve them. With these changes, you may be able to increase the contributions for your retirement, or you may qualify for new deductions on your tax return. Discussing your situation with a financial advisor is a great way to ensure that you capitalize on the new changes coming in 2021 and stay up to date with any changes that follow.
Understand the changes that 2020 has brought for retirement, taxes and savings due to the global pandemic, and the presidential election.
Saving for retirement can be stressful enough, and then you get hit by a global pandemic. Facing Covid’s worldwide pandemic and a presidential election that can change the tax code in the same year has left many people reevaluating their financial situations. As you continue to plan and save for our future, it is important to understand the changes that 2020 has brought and what can best on the horizon in 2021.
Every dollar you contribute to your 401(k) account in 2020 can save you money on your 2020 tax return. Still, to save as much as possible, you should do your best to make sure you meet the contribution deadline!
The contribution limit for 401(k) plans in 2020 is $19,500, and those that are 50 or older can contribute an additional $6,500 catch up contribution. Contributions to a 401(k) account are due by the end of the calendar year, so it is crucial that you contribute the maximum amount possible before the end of the year. By doing so, you can save as much as possible on your 2020 tax return. If you contribute via payroll, do note that it sometimes takes one to two pay periods for a company to process the contribution. So you should plan to reach the contribution limit before your last pay period of the year.
sThose affected by the COVID-19 pandemic can withdraw $100,000 from a 401(k) or IRA between January 1, 2020, and December 31, 2020, without facing the 10% early withdrawal penalty. To qualify for this relief distribution, you, a spouse, or a dependent must have tested positive and been diagnosed with COVID-19, or you must have experienced financial hardships as a result of the pandemic. Relief distributions from tax-deferred accounts will be subject to income tax; fortunately, it can be paid over a three-year period.
Each year after age 72, required minimum distributions from 401(k) plans and traditional IRAs must be taken by December 31. If an individual does not take the required minimum distribution, there is a penalty of 50% of the amount that should have been withdrawn, plus income tax on the distribution. However, a provision in the CARES Act allows individuals to skip their required minimum distribution in 2020 with no penalty. Those who do not need the money can leave the funds in their retirement account.
On October 26, 2020, the Internal Revenue Service (IRS) released Notice 2020-79, which announced the cost-of-living adjustments and other changes that affect retirement contributions for the 2021 tax year. Understanding these new changes will be very helpful to retirement savers in adjusting their retirement savings accordingly.
The contribution limit for 401(k), 403(b), and other 457 plans remains at $19,500 for 2021. The catch-up contribution limit remains at $6,500, making the contribution limit for those 50 and older at $26,000. The overall contribution limit (the combined employee and employer deposits,) has increased from $57,000 to $58,000 or $64,500 for those 50 or older.
Because the compensation limit has increased from $285,000 to $290,000 once an employee’s salary reaches $290,000, they are no longer able to receive an employer’s match to their deposits. Due to this, the plan can elect to stop the employee’s salary deferrals as well.
The annual contribution limit for IRAs remains at $6,000, and the catch-up contribution limit remains at $1,000 for individuals that are 50 or older. Although these contribution limits did not change, the phase-out ranges for IRA contribution deductions have increased for 2021.
Taxpayers can deduct traditional IRA contributions each year on their tax returns. If an employer-sponsored plan covers the IRA contributor or their spouse, the deduction amount is phased-out, based on their filing status and income. The changes to the phase-out ranges for 2021 are as follows:
For single taxpayers also covered by a workplace retirement plan, the phase-out range increased from $65,000 - $75,000 to $66,000 - $76,000.
For a married individual that files a separate return and is covered by a workplace retirement plan, the phase-out range remains $0 - $10,000.
For married couples filing jointly (where the spouse making the IRA contribution is covered by a workplace retirement plan) the phase-out range increased from $104,000 - $124,000 to $105,000 - $125,000.
For married couples filing jointly, where the IRA contributor is not the one covered by a workplace retirement plan, phase-out range is based on the couple’s combined income. The phase-out range increased from $196,000 - $206,000 to $198,000 - $208,000
The deduction phase-out ranges also increased for Roth IRAs. For single and head of household contributors, the phase-out range increased from $124,000 - $139,000 to $125,000 - $140,000. For married couples filing jointly, the range increased from $196,000 - $206,000 to $198,000 - $208,000, and for a married contributor that files a separate return, the range remains from $0 - $10,000.
As a way to encourage and help lower income individuals save for retirement, the IRS offers the “Saver’s Credit,” also known as the Retirement Savings Contribution Credit. This credit can be worth 10%, 20% or 50% of your retirement contributions depending on your filing status and your adjusted gross income. The credit is worth a max of $1,000 for individuals and $2,000 for joint filing couples.
The income limit for the Saver’s Credit has increased for 2021, climbing from $65,000 to $66,000 for joint filing couples, from $48,750 to $49,500 for heads of household, and from $32,500 to $33,000 for singles and married individuals that file separately.
As 2020 comes to an end and you begin the new year, it is important that your financial plans adapt and change with all of these new rules. Planning with a financial advisor can help you evaluate your financial goals and find the best courses of action to ensure that you achieve them. With these changes, you may be able to increase the contributions for your retirement, or you may qualify for new deductions on your tax return. Discussing your situation with a financial advisor is a great way to ensure that you capitalize on the new changes coming in 2021 and stay up to date with any changes that follow.
Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2025 Zoe Financial, Inc. | All rights reserved
