Dollar Limits on Compensation and Benefits Announced

Blog
October 27, 2020

The Internal Revenue Service has announced the 2021 cost-of-living adjustments for various limits affecting employee benefit plans. The more common limits are detailed below for 2021 and 2020.

2021 2020
401(k) & 403(b) Elective Deferrals $19,500 $19,500
Catch-Up Contribution for participants age 50 and over $6,500 $6,500
Defined Contribution Plans-IRC 415 (Including SEP and Keogh Plans) $58,000 $57,000

Maximum Benefit for Defined Benefit Plans

Note: This is not the maximum contribution, it is the maximum benefit that can be funded.

$230,000 $230,000
SIMPLE Retirement Plans
Elective Deferrals $13,500 $13,500
Catch-Up Contribution for participants age 50 and over $3,000 $3,000
Maximum Annual Compensation for Determining Contributions and Benefits $290,000 $285,000
Compensation Limit for Key Employee Determination $185,000 $185,000
Compensation Limit for Highly Compensated Determination $130,000 $130,000
IRA Contributions $6,000 $6,000
IRA Catch-Up Contribution $1,000 $1,000

A detailed listing of all of the adjusted limitations can be found at https://www.irs.gov/pub/irs-drop/n-20-79.pdf

If you should any questions about how these limits apply to you please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301.231.6257.