Blue Ridge ESOP Associates Industry News

New Plan Limits for 2021

Posted by Scott J. Freund, QPA, QKC

Nov 24, 2020 2:14:00 PM

New Plan Limits for 2020

On October 26, 2020, the IRS announced cost of living adjustments affecting qualified retirement plans for 2021. Several the limits are unchanged from the limits which were in place for 2020.

Selected Limits

 

2021

2020

401(k) Elective Deferrals

$19,500

$19,500

401(k) Catch Up Deferrals

$6,500

$6,500

Annual Defined Contribution Limit (Section 415)*

$58,000

$57,000

Annual Compensation Limit **

$290,000

$285,000

Highly Compensated Employees

(look-back year calculation)**

$130,000

$130,000

Key Employee – Officer Threshold*

$185,000

$185,000

Social Security Wage Base

$142,800

$137,700

ESOP Threshold Balance for lengthening the 5-year installment period

$1,165,000

$1,150,000

Amount for lengthening the 5-year ESOP installment period

$230,000

$230,000


*Effective for limitation years ending in calendar year

**Effective for plan years beginning in the calendar year

 The Adjusted Gross Income limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $66,000 for married couples filing jointly, up from $65,000; $49,500 for heads of household, up from $48,750; and $33,000 for married individuals filing separately and for singles, up from $32,500.

Topics: IRS, Plan Limits