Retirement Plan Limitations for 2021

October 28, 2020

By Peter Alwardt, CPA

As an ongoing service to our clients, EisnerAmper LLP is providing this Alert to keep you abreast of the recent changes affecting employee benefit plans.

The Internal Revenue Service announced on October 26 the cost-of-living adjustments applicable to the dollar limitations for defined contribution and defined benefit plans for the tax year 2021. Very few of the limits have changed from 2020, as noted below.

Code Section  2021 2020   2019
IRAs 
IRA Contribution Limit – 219(b)(5)(A)     $6,000 $6,000 $6,000 
IRA Catch-Up Contributions – 219(b)(5)(B)     $1,000 $1,000 $1,000 
SEP 
SEP Minimum Compensation – 408(k)(2)(C)        $650 $600 $600 
SEP Maximum Compensation – 408(k)(3)(C)     $290,000 $285,000 $280,000 
401(k), 403(b), 457, Profit-Sharing Plans, etc. 
Annual Compensation – 401(a)(17)/404(l)     $290,000 $285,000 $280,000
Elective Deferrals – 402(g)(1), 457(e)(15)   $19,500 $19,500 $19,000
Catch-up Contributions – 414(v)(2)(B)(i)     $6,500 $6,500 $6,000
Defined Contribution Limits – 415(c)(1)(A)      $58,000 $57,000 $56,000
Other 
HCE Threshold – 414(q)(1)(B)           $130,000 $130,000 $125,000
Defined Benefit Annual Limit – 415(b)(1)(A)     $230,000 $230,000 $225,000 
Key Employee – 416(i)(1)(A)(i)     $185,000 $185,000 $180,000 
Social Security Wage Base $142,800 $137,700 $132,900

 

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About Peter Alwardt

Peter Alwardt is a Tax Partner specializing in employee benefits, tax and ERISA issues for domestic and international clients. He is a member of the American Institute of Certified Public Accountants and NY State Society of CPAs.