IRS Announces Year 2021 Retirement Plan Limits
The Internal Revenue Service (“IRS”) announced yesterday (October 26, 2020) the following dollar limits applicable to tax-qualified plans for 2021:
- The limit on the maximum amount of elective contributions that a person may make to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan remains unchanged at $19,500.
- The limit on “catch-up contributions” to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan for persons age 50 and older is unchanged at $6,500.
- The dollar limit on the maximum permissible allocation under a defined contribution plan is increased from $57,000 to $58,000.
- The maximum annual benefit under a defined benefit plan is unchanged at $230,000.
- The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will go from $285,000 to $290,000.
- The dollar amount used to identify “highly compensated employees” is unchanged at $130,000.
Additional information regarding benefit plan dollar limits can be obtained in IRS Notice 2020-79.
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