New Retirement Plan Limitations Announced by the IRS for 2021

On Oct. 26, 2020, the IRS announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2021 Tax Year. Changes to the limits are based upon the Social Security cost-of-living increases. Unlike last year, most of the applicable pension and retirement limitations will stay the same for the 2021 Tax Year. 

Below are the new 2021 plan limitations:
 

2021 Retirement Plan Limits

 

2021

2020

2019

401(k),403(b) and 457(b) Deferral Limits     

$19,500

$19,500

$19,000

401(k) and 403(b) Catch-up Deferral Limits 

$6,500

$6,500

$6,000

Annual Limitation on Compensation            

$290,000

$285,000

$280,000

Defined Contribution Limitation                     

$58,000

$57,000

$56,000

Defined Benefit Limitation                               

$230,000

$230,000

$225,000

Highly Compensated Employee Compensation Threshold    

$130,000

$130,000

$125,000

Key Employee Compensation - Officer Threshold

$185,000

$185,000

$180,000

SIMPLE Deduction

$13,500

$13,500

$13,000

SIMPLE Catch-Up Contribution

$3,000

$3,000

$3,000

IRA Contribution Limit

$6,000

$6,000

$6,000

IRA Catch-Up Contribution Limit

$1,000

$1,000

$1,000

Social Security Wage Base

$142,800

$137,700

$132,900

 

 

Employee Benefits
Benefit programs should be a win-win for employers and employees. We strive to accomplish that goal in the design, implementation and operation of sophisticated benefit and executive compensation programs – qualified and non-qualified retirement programs and health and welfare plans. Our employee benefits team has a long track record of working to maximize the efficiency and economic feasibility of each program.

If you have any questions or would like more information, please contact one of the attorneys below.

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