The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021 and after a year full of change there will be little changes to the limits next year.
Important limits for Plan Sponsors to be aware of:
401k Plan Limits
| 2021 | 2020 | |
| Maximum Employee Deferral | $19,500 | $19,500 |
| Catch-Up Contribution Limit | $6,500 | $6,500 |
| Maximum All Contributions* | $58,000 | $57,000 |
| Annual Compensation Limit | $290,000 | $285,000 |
| HCE Income Definition | $130,000 | $130,000 |
| Key-Employee Income Definition | $185,000 | $185,000 |
Important limits pertaining to individuals (outside of 401K):
TRADITIONAL IRA LIMITS
| 2021 | 2020 | |
| Contribution Limits | $6,000 | $6,000 |
| Catch-Up Limit | $1,000 | $1,000 |
| Eligibility: Pre-Tax Cont. (if saver also covered by workplace plan) | ||
| Single | $66,000 – $76,000 | $65,000 – $75,000 |
| Married Filing Jointly | $105,000 – $125,000 | $104,000 – $124,000 |
| Eligibility: Pre-Tax Cont. (if spouse covered by workplace plan) | ||
| Married Filing Jointly | $198,000 – $208,000 | $196,000 – $206,000 |
ROTH IRA LIMITS
| 2021 | 2020 | |
| Contribution Limits | $6,000 | $6,000 |
| Catch-Up Limit | $1,000 | $1,000 |
| Eligibility: Income Phase-Out Limits | ||
| Single | $125,000 – $140,000 | $124,000 – $139,000 |
| Married Filing Jointly | $198,000 – $208,000 | $196,000 – $206,000 |
SAVER’S CREDIT
| 2021 | 2020 | |
| Single | $33,000 | $32,500 |
| Married Filing Jointly | $66,000 | $65,000 |