The IRS has announced contribution and benefit limits for
2021.
The limit on contributions by employees who participate in
401(k)s, 403(b)s, most 457 plans and the federal government’s Thrift Savings
Plan remains unchanged at $19,500.
The catch-up contribution limit for employees age 50 and
older who participate in these plans remains unchanged at $6,500.
The limitation regarding SIMPLE [savings incentive match
plan for employees] retirement accounts remains unchanged at $13,500.
The limit on annual contributions to an individual
retirement account (IRA) remains unchanged at $6,000. The additional catch-up
contribution limit for individuals age 50 and older is not subject to an annual
cost-of-living adjustment (COLA) and remains $1,000.
Effective January 1, the limitation on the annual benefit
under a defined benefit (DB) plan under Section 415(b)(1)(A) remains unchanged
at $230,000. For a participant who separated from service before January 1, the
participant’s limitation under a DB plan under Section 415(b)(1)(B) is computed
by multiplying the participant’s compensation limitation, as adjusted through
2020, by 1.0122.
The limitation for defined contribution (DC) plans under
Section 415(c)(1)(A) (annual additions) has been increased for 2021 to $58,000
from $57,000.
The limitation used in the definition of “highly compensated
employee” under Section 414(q)(1)(B) remains unchanged at $130,000.
Details on these and other retirement-related cost-of-living
adjustments for 2021 are in Notice 2020-79.
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