2021 Retirement Plan Limitations
On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect January 1, 2021 (IRS Notice 2020-79). ...
On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect January 1, 2021 (IRS Notice 2020-79). These COLAs affect various contribution and deduction limits for qualified retirement plans, as well as the deductible contribution limits for traditional Individual Retirement Arrangements (IRAs).
Internal Revenue Code Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. These adjustment procedures are similar to those used to adjust benefit amounts under IRC Section 215(i)(2)(A) or the Social Security Act.
While some limitations increased, the majority of the limitations remain unchanged from the 2020 limits. The more common limitations are summarized below, along with the applicable Code Section and/or Treasury Regulations Section (Regs).
Item | 2021 Limit | 2020 Limit |
---|---|---|
401(k)/403(b)/457 |
$19,500 | $19,500 |
Defined Contribution Plan |
$58,000 | $57,000 |
Defined Benefit Plan |
$230,000 | $230,000 |
Annual Compensation Limit |
$290,000 | $285,000 |
Catch-Up Contribution Limit |
$ 6,500 | $ 6,500 |
Highly Compensated Employee |
$130,000 | $130,000 |
Key Employee |
$185,000 | $185,000 |
Social Security Taxable |
$142,800 |
$137,700 |
On October 26, 2020, the Internal Revenue Service announced the cost-of-living adjustments (COLA) that will take effect January 1, 2021 (IRS Notice 2020-79). ...
In March 2020, the CARES Act created the Employee Retention Credit (“ERC”), which allowed qualifying employers of any size to claim a refundable ...
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