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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