Publications
Alert

IRS Announces Year 2021 Retirement Plan Limits

Employee Benefits & Executive Compensation

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.       

© 2020 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.