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Retirement Plan Limits Announced for 2021

The Internal Revenue Service (“IRS”) announced on October 26, 2020, the retirement plan contribution limits, adjusted for cost-of-living adjustments, for 2021.  These adjustments can be found in greater detail in IRS Notice 2020-79.

The COVID-19 pandemic’s continuing impact on the U.S. economy contributed to relatively flat changes in the 2021 COLA amounts as U.S. economic deflation during the first half of 2020 impacted the COLA metrics.

The IRS increased the IRS annual compensation amounts, but limits for elective deferrals and catch-up contribution limits for age 50+ employees remained largely unchanged. The SSA’s 1.3 percent increase in benefits is one of the smallest increases historically for Social Security and Supplemental Security Income beneficiaries.

401k Plan Limits20212020
401k Elective Deferrals$19,500$19,500
Annual Defined Contribution Limit$58,000$57,000
Annual Compensation Limit$290,000$285,000
Catch-Up Contribution Limit$6,500$6,500
Highly Compensated Employees$130,000$130,000
Non 401k Related Limits20212020
403(b)/457 Elective Deferrals$19,500$19,500
Catch-Up Contribution Limit 403(b)/457$6,500$6,500
SIMPLE Employee Deferrals$13,500$13,500
SIMPLE Catch-Up Deferral$3,000$3,000
SEP Minimum Compensation$650$600
SEP Annual Compensation Limit$290,000$285,000
Social Security Wage Base$142,800$137,700
Annual Defined Benefit Limit$230,000$230,000
Key Employee$185,000$185,000

Provided by Wiss’ Employee Benefit Plan Group

Questions about the new contribution limits? Our EBP Experts are standing by and ready to help.

401k, benefits, Cindy Sandomenico, Craig Erickson, EBP, Employee Benefit Plans, Laura Zindel, retirement

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