Below is an outline of the newly released 2021 contribution limits, which will take effect on January 1, 2021.
There are not many increases in 2021. The key increases are:
Annual compensation limit is increased from $285,000 to $290,000
Annual additions limit for defined contribution plans is increased from $57,000 to $58,000
Social Security Wage Base is increased from $137,700 to $142,800
SEP Threshold is increased from $600 to $650
ESOP: Account Balance is increased from $1,150,000 to $1,165,000
The unchanged limits are as follows:
Salary deferral limit for 401(k), 403(b), and 457 plans is unchanged at $19,500
Salary deferral limit for SIMPLE IRA remains unchanged at $13,500
Catch-up contribution limits for 401(k) plans remains unchanged at $6,500 and for SIMPLE IRAs the limit remains at $3,000
If you have any questions about these changes please let us know. We are always here to help with your retirement plan needs!