IRS Announces 2021 Dollar Limits for Retirement Plans

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The IRS has announced the 2021 annual dollar limitations for retirement plans based on the applicable cost-of-living adjustment guidelines. The annual limit for elective deferrals to 401(k) plans and 403(b) plans will remain unchanged at $19,500, and the annual limit for catch-up contributions for individuals age 50 or older also will remain unchanged at $6,500. The Social Security Administration also recently announced that the Social Security wage base will increase from $137,700 for 2020 to $142,800 for 2021.

Listed below are the principal limits applicable for 2021 and 2020. 

Limit

2021

2020

Compensation Limit

$290,000

$285,000

Elective Deferrals (401(k) plans, 403(b) plans, 457(b) plans)

$19,500

$19,500

Catch-up Contributions (plans other than SIMPLE plans)

$6,500

$6,500

Defined Contribution Plan 415 Limit

$58,000

$57,000

Defined Benefit Plan 415 Limit

$230,000

$230,000

Highly Compensated Employee

$130,000

$130,000

Social Security Wage Base

$142,800

$137,700

SIMPLE Plan Limit

$13,500

$13,500

SIMPLE Catch-up Contributions

$3,000

$3,000

 

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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