Federal agencies recently announced cost-of-living adjustments on Social Security taxable earnings and maximum benefits, limits on compensation and deferrals for retirement plans, and limits on health and welfare plans. Additionally, excise tax penalties for failure to offer minimum essential health care coverage and failure to offer coverage that provides minimum value or is affordable, and penalties for failure to file correct information returns have also been announced. Below is a chart comparing the dollar limits and penalties for 2020 and 2021. Additionally, 1983 amendments to the Social Security Act gradually increased the full retirement Social Security to age 67 for individuals born after 1954. The gradual increases are shown in the chart below.
* Fee applicable for plan years beginning on or after October 1, 2019 and ending before October 1, 2020 is $2.54. Fee applicable for plan years ending on or before September 30, 2019 will be $2.45.
*** Penalties may be reduced if a correction is made within a specified amount of time.
**** Additional Medicare Hospital Insurance Tax of .9% will apply to higher wage earners.
For reference, see IRS Notice 2020-44, IRS Notice 2020-79, IRS Revenue Procedure 2020-32, IRS Revenue Procedure 2020-36, IRS Revenue Procedure 2020-43, IRS Revenue Procedure 2020-45, PBGC Press Release, Premium Rates (October 15, 2020); HHS Notice of Benefit and Payment Parameters for 2021 (CMS-9916-F, May 14, 2020), 2021 Social Security Changes Fact Sheet, CMS Announcement 2021 Medicare Parts A & B Premiums and Deductibles Announced (11-6-20), and P.L. 98-21, the Social Security Amendments of 1983, signed April 20, 1983.
