Extra! Extra! The IRS has released the 2021 contribution limits. Since not everyone was awaiting them quite as eagerly as we were, here is a quick summary.
Here's a rundown of the 2021 limits:
Compensation and Benefit Limits
- Annual compensation limit
- Increases from $285,000 to $290,000
- Salary deferral limit for 401(k) and 403(b) plans
- Remains unchanged at $19,500
- Salary deferral limit for SIMPLE IRA
- Remains unchanged at $13,500
- Salary deferral limit for 457 plans
- Remains unchanged at $19,500
- Catch-up contribution limit for 401(k) plans
- Remains unchanged at $6,500
- Catch-up contribution limit for SIMPLE IRAs
- Remains unchanged at $3,000
- Annual additions limit for defined contribution plans
- Increases from $57,000 to $58,000
- Annual additions limit for defined benefit plans
- Remains unchanged at $230,000
- Social Security Wage Base
- Increases from $137,700 to $142,800
Testing Limits
- Highly compensated employee
- Remains unchanged at $130,000
- Key employee based on officer status
- Remains unchanged at $185,000
- Key employee based on 1% owner compensation
- Remains unchanged at $150,000
You can find a chart of these limits from 2012 to 2021 here in the DWC Knowledge Center.