New 2021 Contribution Limits

October 30, 2020

Each year, the IRS adjusts the contribution limits for qualified retirement plans to account for cost of living increases. On October 26, 2020, the IRS published contribution limits for 2021 in Notice 2020-79.


Cost of Living Increases

While several limits remained unchanged for the upcoming year, there are a few notable limit increases.

The UNCHANGED limits are as follows:

401(k) Plans

Elective Deferrals $19,500
Catch-up Contributions $6,500



Elective Deferrals $13,500
Catch-up Contributions $3,000


457 Plans

Elective Deferrals $19,500


The INCREASED limits for 2021 are:

Annual Compensation $290,000
Minimum Compensation for SEPs $650
$415 Limit – Defined Contribution $58,000
$415 Limit – Defined Benefit $230,000
Social Security Wage Base $142,800


Testing Limits

In addition to the contribution limits, the IRS also updated some limits that will be used for 2021 testing.

There are no increases for the HCE Determination compensation ($130,000), Key Employee Officer ($185,000), or Key Employee 1% owner ($150,000) for 2021.


IRA & Roth IRA Range Limit Increases

Although the contribution limits for IRAs did not change and remains at $6,000 for 2021, the income ranges did increase. This increase will allow you to earn more money while still taking advantage of the tax deferred Roth IRA and / or the tax deferred traditional IRA.


Traditional IRA Limit Increase:*

Individual, head of household Max Income: $66,000 Phase out: $76,000
Married, filing jointly Max income: $105,000 Phase out: $125,000


Roth IRA Limit Increase:*

Individual, head of household Max Income: $125,000 Phase out: $140,000
Married, filing jointly Max income:$198,000 Phase out: $208,000

*These limits only apply if you and your spouse are covered by a workplace retirement plan. For those not covered by a workplace retirement plan, your contributions are fully deductible regardless of income.


Although the IRS made few changes to the contribution limits for 2021, you can still take advantage of retirement plan savings by contributing to your qualified retirement plan for 2021.

For questions about the 2021 contribution limits, contact us at or 1-800-858-6989.

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