The Internal Revenue Service announced the dollar limitations for retirement plans and other benefits, beginning January 1, 2021. Some of the limits are listed below.
LIMITATION
|
2020 AMOUNT |
2021 AMOUNT |
Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan
|
$285,000 |
$290,000 |
Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans1
|
$19,500 |
$19,500 |
Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans
|
$6,500 |
$6,500 |
Limitation on Annual Additions to a Defined Contribution Plan2
|
$57,000 |
$58,000 |
Limitation on Annual Benefits from a Defined Benefit Plan3
|
$230,000 |
$230,000 |
Highly Compensated Employee Compensation Threshold4
|
$130,000 |
$130,000 |
SEP Compensation Threshold
|
$600 |
$650 |
| Social Security Taxable Wage Base for Social Security Tax (6.2%) |
$137,700 |
$142,800 |
For Medicare Tax (1.45% / 2.35%)
|
No Limit |
No Limit |
Health Savings Accounts:
• Individual Contribution Limit
• Family Contribution Limit
• Catch-Up Contributions |
$3,550
$7,100
$1,000 |
$3,600
$7,200
$1,000 |
Health Flexible Spending Accounts5 |
$2,750 |
$2,750 |
1 This limit and the catch-up limit also apply to Roth (after-tax) contributions under 401(k) and 403(b) plans that permit such contributions.
2 In no event may annual additions exceed 100% of a participant’s compensation.
3 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s high three years.
4 Generally, an employee is considered “highly compensated” if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.
5 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.
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