Late last month, the IRS put out the annual limits for retirement plan contributions for 2021. For the most part, everything remained the same as the limits for 2020. This is because interest rates and cost of living rates have remained extremely low.
IRA contribution limits for traditional and Roth accounts in 2021 will be the same as 2020’s. If you are under age 50, you can put in up to $6,000 in 2021. If you’re 50 or older, you get a $1,000 catch-up that raises this limit to $7,000.
The following table summarizes the 2021 changes compared to 2020 for 401k’s as well as other types of retirement plans:
| 401k Plan Limits for Year | 2021 | 2020 |
| 401k Elective Deferrals | $19,500 | $19,500 |
| Annual Defined Contribution Limit | $58,000 | $57,000 |
| Annual Compensation Limit | $290,000 | $285,000 |
| Catch-Up Contribution Limit | $6,500 | $6,500 |
| Highly Compensated Employees | $130,000 | $130,000 |
| Non-401k Related Limits | ||
| 403b/457 Elective Deferrals | $19,500 | $19,500 |
| SIMPLE Employee Deferrals | $13,500 | $13,500 |
| SIMPLE Catch-Up Deferral | $3,000 | $3,000 |
| SEP Minimum Compensation | $650 | $600 |
| SEP Annual Compensation Limit | $290,000 | $285,000 |
| Social Security Wage Base | $142,800 | $137,700 |
Please let me know if you have any questions.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
