IRS Update: 2021 Qualified Retirement Plan Contribution Limits
Wondering how much you can sock away for retirement next year? Knowing the limits for different types of accounts can help you maximize your retirement savings AND save money on taxes.
Yesterday, the IRS released the updated contribution limits for qualified retirement plans for 2021. Headline: Most limits stay the same as 2020, with a few nuances.
Here are the new 2021 limits so you can stay on top of your contributions:
- 💲 401(k) and 403(b) Deferral Limit: Stays flat at $19,500 (additional catch up if you are over 50 also stays flat at $6,500 in 2020).
- 💲 IRA Limit: Stays the course at $6,000 for 2020 with an additional $1,000 allowed if over 50.
- 💲 SEP IRAs: The limit in 2020 was $57,000 and it increases to $58,000 in 2020 (with a cap of 25% of your net earnings).
- 💲 SIMPLE Retirement Accounts: stays flat at $13,500.
- 💲 Defined Benefit Plan Maximum Annual Benefit – Stays flat at $230,000.
- 💲 Definition of a "Highly Compensated Employee": Remains unchanged at $130,000.
With some careful planning, you can make sure you maximize every dollar you're bringing home. Details on these and other retirement-related cost-of-living adjustments for 2021 are in Notice 2020-79.
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