The Internal Revenue Service (IRS) has set the maximum benefits and contribution limits for the tax year 2021. More information about what has changed for 2021 can be found at the IRS website –Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
Advisors and Human Resource (HR) professionals should convey to employees their plan contribution limits and encourage those who can defer extra dollars for retirement savings to do so. While not all plan participants will be able to fund their 401(k) accounts up to the maximum, the contribution cap is a goal they should keep in mind.
2021 Maximum Benefits & Contributions Limits Chart
| Limit/Contribution | 2021 | 2020 | 2019 |
|---|---|---|---|
| Defined Benefit - 415 Limit | $230,000 | $230,000 | $225,000 |
| Definied Contribution - 415 Limit | $58,000 | $57,000 | $56,000 |
| Compensation | $290,000 | $285,000 | $280,000 |
| Key Employee Dollar Limit (top-heavy plans) | $185,000 | $185,000 | $180,000 |
| Highly Compensated Employee Limit | $130,000 | $130,000 | $125,000 |
| Social Security Taxable Wage Base | $142,800 | $137,700 | $132,900 |
| Limit/Contribution | 2021 | 2020 | 2019 |
|---|---|---|---|
| 401(k), 403(b), and 457(b) (Governmental and Non-governmental) Elective Deferral Limit | $19,500 | $19,500 | $19,000 |
| 401(k), 403(b), and 457(b) Governmental* Catch-up Contribution Limit | $6,500 | $6,500 | $6,000 |
| SIMPLE Defferal Limit | $13,500 | $13,500 | $13,000 |
| SIMPLE Catch-up Contribution Limit | $3,000 | $3,000 | |
| SEP Contribution (Up to 25% of Compensation) | $58,000 | $57,000 |
| IRA/Roth Limit | 2021 | 2020 | 2019 |
|---|---|---|---|
| Maximum Contribution Limit | $6,000 | $6,000 | |
| Catch-up Contribution Limit | $1,000 | $1,000 |
| Deductibility of IRA Contribution (phaseouts) | 2021 | 2020 | 2019 |
|---|---|---|---|
| Single | $66,000-$76,000** | $65,000-$75,000** | |
| Married Filing Jointly (MFJ) | $105,000-$125,000** | $104,000-$124,000** | |
| Single or MFJ | Unlimited | Unlimited | |
| Married Filing Jointly (MFJ) | $198,000-$208,000** | $196,000-$206,000** | |
| Roth Contribution Eligibility | 2021 | 2020 | 2019 |
|---|---|---|---|
| Single | $125,000-$140,000** | $124,000-$139,000** | |
| MFJ | $198,000-$208,000** | $196,000-$206,000** | |
| Filing Separately | $0-$10,000** | $0-$10,000** |
* Catch-up contributions are not allowed on non-governmental 457(b) plans.
** Modified adjusted gross income.
