IRS Announces 2021 Cost of Living Adjustments to Retirement Plan Limits
Updated: Mar 11, 2022
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!