By Pension and Benefits Editorial Staff
Wolters Kluwer has prepared projected inflation-adjusted phase-out limits that apply to taxpayers making contributions to traditional and Roth IRAs for the 2020 tax year. The projected amounts are based upon Consumer Price Index figures released by the U.S. Department of Labor on September 12, 2019. The Tax Cuts and Jobs Act of 2017 (TCJA, P.L. 115-97) mandated a change from the Consumer Price Index for All Urban Consumers (CPI-U) to the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). Official amounts for 2020 should be released by the IRS later in 2019.
Traditional IRAs. The maximum amount of deductible contributions that can be made to an IRA is projected to be $6,000 for 2020, which is unchanged from the 2019 amount. The increased contribution amount for taxpayers age 50 and over will, therefore, be $7,000, which is the same as the 2019 amount.
The above-the-line deduction for traditional IRA contributions is projected to begin to phase out for married joint filers whose income is greater than $104,000 if both spouses are covered by a retirement plan at work ($1,000 more than for 2019). If only one spouse is covered by a retirement plan at work, the phaseout is projected to begin when modified adjusted gross income reaches $196,000 (up from $193,000 for 2019). For heads of household and unmarried filers who are covered by a retirement plan at work, the 2020 income phaseout range for deductible IRA contributions is projected to begin at $65,000, up $1,000 from 2019.
Roth IRAs. Contributions to a Roth IRA are limited for taxpayers with adjusted gross income above certain limits adjusted annually for inflation. For 2020, the allowed Roth IRA contribution amount is projected to phase out for married taxpayers filing jointly with income between $196,000 and $206,000 (up from $193,000 and $203,000 for 2019). For heads of household and unmarried filers, the projected phaseout range is between $124,000 to $139,000 (up from $122,000 up to $137,000 for 2019).
Wolters Kluwer also calculated 2020 inflation-adjusted amounts for certain fringe benefits, tax bracket, standard deduction amounts, and other amounts.
SOURCE: Wolters Kluwer.
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