Posted by Saaib T. Uppal, CPA, QKA
The IRS has announced cost-of-living adjustments that should be noted for retirement planning purposes.
Below is a chart that outlines employee benefit plan limits for 2021:
PLAN LIMITS |
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RETIREMENT & SOCIAL SECURITY |
2021
|
2020
|
2019
|
|
| Section 401(k), 403(b), 457(b) elective deferrals | $19,500 | $19,500 | $19,000 | |
| 401(k) or 403(b) catch up contributions | 6,500 | 6,500 | 6,000 | |
| Section 415 – Defined contribution plan maximum annual contributions without catch up | 58,000 | 57,000 | 56,000 | |
| Section 415 – Defined benefit plan maximum annual benefit | 230,000 | 230,000 | 225,000 | |
| Section 414(q)(1)(B) – Highly compensated employee – minimum compensation (applies to look back years in indicated year) | 130,000 | 130,000 | 125,000 | |
| Section 416 – Key employee definition – officer compensation | 185,000 | 185,000 | 180,000 | |
| Section 416 – Key employee definition – 1% owner compensation | 150,000 | 150,000 | 150,000 | |
| Section 401(a)(17) – Maximum includible annual compensation | 290,000 | 285,000 | 280,000 | |
| IRA or Roth IRA annual contribution limit | 6,000 | 6,000 | 6,000 | |
| IRA or Roth IRA annual catch up contributions | 1,000 | 1,000 | 1,000 | |
| SIMPLE Salary Deferral Limit | 13,500 | 13,500 | 13,000 | |
| SIMPLE Catch-up Limit | 3,000 | 3,000 | 3,000 | |
www.belfint.com | info@belfint.com | 302.225.0600 |
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Plan administrators should ensure they pass along this new information to their participants, so they have all the required information when planning their deferrals for 2021.
