resources
At a Glance
The IRS released the cost of living adjustments applicable to dollar limitations for qualified retirement plans for tax year 2021. Many limits provided below did not change from 2020.
Limits Mostly Unchanged from 2020
In Notice 2020-79 , the IRS released the dollar limitations for qualified retirement and certain non-qualified plans that become effective January 1, 2021. The dollar limitations adjusted by reference to IRC §415(d) are modified annually for inflation and consequently, most of them are unchanged for 2021.
QUALIFIED RETIREMENT PLAN LIMITS (2021 V 2020)
DESCRIPTION
2021 LIMIT
2020 LIMIT
Participant pretax contribution limit for 401(k) and 403(b) plans
Section 402(g)(1)
$19,500
$19,500
Deferral limit for deferred compensation plans of state and local governments and tax-exempts
Section 457(e)(15)
$19,500
$19,500
Dollar Limitation for Catch-Up Contributions for Participants Age 50 or over in 401(k), 403(b), governmental 457 plans and SEPs
Section 414(v)(2)(B)(i)
$6,500
$6,500
Dollar Limitation for Catch-Up for Participants Age 50 or over Contributions to a SIMPLE IRA or a SIMPLE 401(k)
Section 414(v)(2)(B)(ii)
$3,000
$3,000
Defined Benefit Plan Limit1
Section 415(b)(1)(A)
Lesser of $230,000 or 100% of the participant's 3 year high compensation
Lesser of $230,000 or 100% of the participant's 3 year high compensation
Defined Contribution Plan Limit
Section 415(c)(1)(A)
Lesser of $58,000 or 100% of participant's compensation
Lesser of $57,000 or 100% of participant's compensation
Maximum ESOP account balance subject to a 5-year distribution period/increments for additional year
Section 409(o)(1)(C)(ii)
$1,165,000/$230,000
$1,150,000/$230,000
Highly Compensated Employee dollar threshold
Section 414(q)(1)(B)
$130,000
$130,000
Definition of Key Employee in a Top-Heavy Plan—officer compensation threshold
Section 416(i)(1)(A)(i)
$185,000
$185,000
Annual limit on includible compensation for benefits and allocations2
Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii)
$290,000
$285,000
SEP employee participation floor
Section 408(k)(2)(C)
$650
$600
Simple Retirement Accounts contribution limit
Section 408(p)(2)(E)
$13,500
$13,500
Compensation amount of control employees for fringe benefit valuation purposes
Treas. Reg. Section 1.61-21(f)(5)(i) and (iii)
$150,000/$235,000
$115,000/$230,000
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