The IRS has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020. For company retirement plans, the most recognized highlights include:
The following limits are going up for 2021:
- The annual additions limit for defined contribution plans increases to $58,000
- The annual compensation limit increases to $290,000
- The Social Security Wage Base increases to $142,800
The following limits will remain the same for 2021:
- The salary deferral limit for 401(k), 403(b), and 457 plans remains at $19,500
- The catch- up contribution limits for 401(k) plans remains at $6,500
- The annual additions limit for defined benefit plans remains at $230,000
- The compensation limit for determining who is a highly compensated employee remains at $130,000
Review the full list of contribution limit changes below and share with your plan participants!