The IRS and Social Security Administration have announced the 2021 cost-of-living adjustments for retirement plans.
Here are some of the more significant limitations affecting employee benefit plans:
- The maximum amount that may be deferred under 401(k), 403(b) and 457(b) plans, not including catch-up deferrals, remains unchanged at $19,500, according to under Internal Revenue Code Section 402(g) limit.
- The IRC Section 415 maximum annual benefit under a defined benefit plan will remain at $230,000.
- The IRC Section 415 maximum annual additions under a defined contribution plan will be increased by $1,000 to $58,000. The increase is subject to the overall limitation of 100% of compensation.
- The highly compensated employee threshold dollar limit remains unchanged at $130,000.
- The maximum amount of compensation that may be taken into account for benefit purposes under a qualified plan will be increased from the current limit of $285,000 to $290,000.
- The catch-up deferrals to 401(k), 403(b) and 457 plans will remain unchanged at $6,500. Please note that the catch-up deferrals are only available for plan participants who turn 50 at any time during the plan year and who may no longer make deferrals because of plan or regulatory limitations.
- The Social Security taxable wage base is up to $142,800, increased by $5,100.