The Internal Revenue Service has announced the cost of living adjusted dollar limits applicable to benefit plans for 2021 (see IRS Notice 2020-79). The key limits are listed below:

 

2021 Limit

2020 Limit

401(k)/403(b)/457 Plan Maximum Elective Deferral

$19,500

$19,500

401(k)/403(b)/457 Catch-Up

$6,500

$6,500

Defined Contribution Maximum Annual Addition

$58,000

$57,000

Defined Benefit Maximum Annual Pension

$230,000

$230,000

Qualified Plan Maximum Compensation Limit

$290,000

$285,000

Highly Compensated Employee

$130,000

$130,000

IRA Contribution Limit

$6,000

$6,000

IRA Catch-Up Contributions

$1,000

$1,000

SIMPLE Limit

$13,500

$13,500

SIMPLE Catch-Up

$3,000

$3,000

In addition, the Social Security taxable wage base will increase from $137,700 for 2020 to $142,800 for 2021.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.