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Author: Dylan Telerski

Dylan is a marketing specialist at Ubiquity Retirement and Savings. A passionate champion for small business, she can be found demystifying the financial industry, advocating for the underdog, and making playlists you did not ask for.

Curious how much you can invest toward your retirement in 2022?

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The IRS has announced the 2022 contribution limits for retirement and health savings accounts. This includes contribution limits for 401(k) and 403(b) plans, income limits for IRA contribution deductibility, and the salary threshold to classify “key” and “highly compensated employees”

While contribution limits for individual retirement accounts (IRAs) won’t increase from 2021 to 2022, there is good news for retirement savers who participate in a workplace employment plan like a 401(k).

Let’s take a look at the updated limits below:

2022 401(k) and 403(b) individual contribution limits (IRS 402(g) Limit)

Age 49 and under


Age 50 and older

Additional $6,500

The IRS has also set limits for the total amount that may be contributed to your retirement savings 401(k) account from all sources combined (IRS section 415 limit). This includes any employer matching or profit-sharing contributions, and any employee after-tax contributions. For 2022, this limit has increased from $58,000 to a new maximum of $61,000.

Every plan is different, so it’s important to refer to your Plan Document for any compensation or other applicable limits.

Cut through the complexity of choosing and customizing the right 401(k) for your small business. Get an instant quote.

How many employees do you have?
I am a sole proprietor
(just me/or my business partner/spouse)

2022 Highly Compensated and Key Employee definitions and limits

Key Employee Officer Compensation


Highly Compensated Employee


Annual Compensation Limit


2022 Roth and Traditional IRA contribution limits

Age 49 and under

Up to $6,000 (must have earned income)

Age 50 and older

Additional $1,000

2022 Traditional IRA modified adjusted gross income limit for partial deductibility


$68,000 – $78,000

Married – Filing joint returns

$109,000 – $129,000

Married – Filing separately

$0 – $10,000

Non-active participant spouse

$204,000 – $214,000

2022 Roth IRA modified adjusted gross income phase-out ranges


$129,000 – $144,000

Married – Filing joint returns

$204,000 – $214,000

Married – Filing separately

$0 – $10,000

2022 Simple IRA contribution limits

Age 49 and under


Age 50 and older


2022 Health Savings Accounts (HSA) contribution limits

Individual (employer + employee)


Family (employer + employee)


Age 55 or older**

Additional $1,000

**Catch-up contributions can be made at any time during the year in which the HSA participant turns 55.

If you need more detailed guidance, see IRS Notice 2021-61.

If your employer does not offer a 401(k) match, you still have lots of options available to help you meet your retirement savings goals. For instance, you can invest more heavily in your future by contributing a higher percentage of your salary to your 401(k) plan or other tax-advantaged savings account. Continue reading to learn more.

Contribute to your 401(k) even without the match.

For 2022, you can contribute up to $20,500 into a 401(k). If you’re over 50 years old, you can add an extra $6,500. These amounts are taken off your taxable income for the year, so you’ll not only earn on your investments, plus interest, but you’ll reduce your tax burden as well.

Invest more heavily in your 401(k).

If your employer isn’t matching, you may want to put a higher percentage of your income into your retirement plan since you have only yourself to rely upon. If your company was providing a match, you might put in 6% of your salary and receive another 3% from your employer’s 50% match. Since you’re not getting that match, you may want to simply put 9% of your salary in yourself.

Contribute to an IRA.

Anyone can take out a self-directed Individual Retirement Account. Even if you have an employer-sponsored 401(k), you’ll be able to contribute funds to both. The benefit of an IRA is that the fees are low and there are unlimited investment options. The downside is that you can only contribute a maximum of $6,000 into this account (or $7,000 if you’re over 50), so you’ll have to put more money into your 401(k) once you hit the IRA’s annual ceiling.

Open a Solo 401(k).

You may consider opening a Solo 401(k) if you’re self-employed or earn income from freelance work or side jobs. If your employer runs a Traditional 401(k), an alternate option might be to open a Roth Solo 401(k) – agreeing to pay taxes up front in exchange for a tax-free withdrawal in retirement. You can also elect to make profit-sharing contributions to a Solo 401(k) plan.

Talk to your employer.

Talk to your employer, as you may be able to persuade your company to begin offering a match. One big advantage of employer matches is that they can be taken as deductions on the federal corporate income tax return, and are often exempt from state and payroll taxes as well. Plus, offering a match makes employers more competitive, so they can quickly recoup the expense by improving their employee retention rate.

Retirement lasts for roughly a quarter of your life. Employers and employees alike can make sure their retirement savings goals are met by starting an affordable, easy-to-manage 401(k) for small businesses. From Safe Harbor plans that avoid annual IRS testing to a Roth 401(k), we can help you find the right plan that is tailored to the needs of your business. See how simple it is to get started by contacting us today for your free consultation.

The $3.5 trillion federal budget plan contains a retirement mandate, refundable Saver’s Credit, and new limits to wealthy retirement savers’ tax favorability. Lawmakers hope to shore up funding for retirees, prevent overreliance on Social Security, and close the gaps between the haves and have-nots. If passed, the plan would go into effect in 2023, which gives companies plenty of time to decide whether to create an employer-sponsored plan to offer workers instead.

What’s In the Retirement Mandate Proposal?

The retirement mandate would compel all businesses with five or more employees who don’t currently offer a retirement plan to automatically set aside 6% of new workers’ income into a low-cost IRA plan, with automatic escalations up to 10% over time. Workers can choose to opt out of the plan, and employers are not required to contribute a match. To help offset administrative costs, the proposal includes tax incentives for small business employers – or a $900/year tax penalty per employee per year for failure to comply.

The U.S. Treasury would also make the Saver’s Credit refundable and contribute $500 to $1,000 per year to each account. Currently, there is a nonrefundable tax credit, which reduces one’s overall tax bill, but does not accrue interest and growth in a retirement savings account.

Wealthy savers making over $400,000, on the other hand, would see new caps on tax favorability. Individuals with retirement accounts worth more than $10 million would be prohibited from contributing additional savings and would have to take a new required minimum distribution each year. The bill also seeks to repeal Roth conversions in IRAs and 401(k)s in the so-called “mega-backdoor Roth” strategy.

Why Is the Government Proposing Retirement Legislation Now?

A third of American workers in private industry didn’t have access to an employer-sponsored retirement savings vehicle like IRAs or 401(k) plans in 2020, according to government data. Part-time workers, service-sector employees, and minimum wage workers were the least likely to receive assistance in setting money aside for retirement. Workers are 12 times more likely to save for retirement when given the chance to do so through an employer plan.

Is This Federal Retirement Plan Any Good?

When states like Illinois, Oregon, and California enacted retirement mandates, 51% of employers chose to create their own plans instead, according to research by Pew Charitable Trusts. This allows them to choose the plan design and offer competitive benefits to their workers, rather than sign up for the status quo. Plans like these can be effective at generating savings. Take Oregon, for instance, where $120 million has been saved since 2015, when the mandate was put in place; some 73% of employers were either “neutral” or “satisfied” with the OregonSaves program.

Will the Plan Be Implemented?

The House Ways and Means Committee approved the retirement mandate with a 22-20 vote on September 9. While the mandate did make its way into the budget bill, the proposal may still be debated and potentially altered during the markup sessions. Lawmakers plan to pass the budget through a process of reconciliation, which requires unanimous support from Democrats, even if no Republicans vote in favor.

Low-Cost, Flat-Fee 401(k)s With Ubiquity

Ubiquity is a low-cost, flat-fee small business 401(k) administrator with more than 20 years of experience helping employers and entrepreneurs build their retirement benefit plans. We offer traditional and Roth 401(k) plans, as well as SIMPLE, Solo, and Safe Harbors, all tailored to best align with your needs.

A 401(k) can be a great tool for talent attraction and retention, as well as a vehicle to meet your own personal retirement goals. Contact us to explore your options for small business retirement plans before the mandate goes into effect.

How Are Small Businesses Doing in 2021?

Dylan Telerski / 25 Oct 2021 / Business

2021 small business

Small businesses operating during the pandemic in 2020 faced a challenge like no other. Forced closures, employee quarantines, new health guidelines, and uncertainty about what’s coming next strained finances and prompted business owners to make significant changes in how they operate and find creative solutions to stay competitive.

Small businesses are innovative and resilient.

Despite all the setbacks and obstacles of 2020 and early 2021, small businesses have proven to be tough and resilient. According to a Bank of America study, 60% of businesses expect their revenue to increase this year, a number that is nearly double that from last year. Additionally, 62% of businesses polled implemented new digital tools to better adapt to conditions during the pandemic, many of which they expect will continue into the future. These business strategies include:

  • Interacting with employees virtually
  • Accepting more cashless payments
  • Connecting with customers virtually
  • Expanding social media presence

Other innovative strategies that enabled small business owners to survive include:

  • Implementing innovations
  • Reducing budgets
  • Temporarily closing and/or limiting operating hours
  • Implementing new practices like remote work / curbside pickup / delivery

It is estimated that at least half of small business owners in the U.S. took an EIDL or PPP loan to buoy their finances in the interim.

Ecommerce remains robust.

Shoppers have embraced online shopping. E-commerce grew an estimated 44 percent to $861 Billion in 2020, according to Digital Commerce 360.

Customers would rather give locally.

Americans have a lot of love for small businesses. When given the chance, 83 percent of consumers say they prefer to purchase from a local business, rather than a large corporation. Similarly, 84 percent of people said they’d pay more to support the local business.

Hiring is extremely difficult.

As the economy recovers, many workers have elected to stay home and wait it out, collecting government benefits instead. More than 40 percent of jobs are not being filled, despite companies offering higher wages, signing bonuses, remote options, paid leave, and flexible hours.

401(k) plans remain a top benefit.

The 401(k) retirement savings program is one perk that has remained consistently popular and almost expected. Next to health insurance, small business 401(k)s are the most common benefit – topping life and long-term disability insurance.

Almost half of small business owners offer retirement plans to their employees, and one-third of small business owners expect to introduce the benefit within the next 12 months. Not only do employers feel responsible for the overall wellbeing of their employees, but 76 percent of employees believe their employers bear some degree of responsibility to make it easy for them to save for retirement.

The past year has seen many ups and downs, but just 11.5 percent of small business plans reduced or suspended their 401(k) plan matching contribution. By comparison, four times as many small business employers made changes to 401(k) plans during the Great Recession of 2008-2009.

Suspending the match directly correlated with a decrease in plan participation and deferral rates; 72.9 percent of companies that suspended the match saw declines in participation, compared to 14.4 percent of companies that maintained a consistent plan.

On the bright side, 60 percent of those who reduced or suspended their 401(k)s say they plan to reinstate the contributions in 2021, and by May 2021, 30 percent had already done so.

It’s never been more affordable for small business employers to offer a retirement savings plan, especially when they work with Ubiquity, a leading administrator that works exclusively with small enterprises. Companies can receive up to $5,000 per year in tax credits for the first year to offset the cost of a new plan. They can receive another $1,500 over three years for choosing “auto-enrollment” as an option, as well as write off any matching contributions made to employee accounts from their taxable profits.

Contact Ubiquity to learn how to start a 401(k) plan for your small business. We have provided affordable, pay-as-you-go, flat-fee retirement savings plans to small businesses and solopreneurs for over two decades!

The goal of 401(k)s and Individual Retirement Accounts (IRAs) was always to give the lower and middle class a way to save a nest egg for the future. Yet, Congress is concerned there are loopholes allowing the ultra-wealthy to exploit these tax shelters.

For instance, PayPal Cofounder Peter Thiel has amassed a $5 Billion tax-free Roth Individual Retirement Account, despite limits to annual contributions.

How Did Peter Thiel Grow His IRA To $5 Billion in 20 Years?

If you have an IRA or have looked into getting one, you might well be aware that, as of 2021, you could only put a maximum of $6,000 (under 50) or $7,000 (50+) into an IRA every year. Over two decades, that would amount to $120,000 – $140,000. So how did Peter Thiel end up with $5 billion?

Back in 1999, the Clinton administration blocked Americans making over $110,000 per year from using the tax-free accounts and capped annual contributions at $2,000. Thiel was running a months-old startup venture, earning a modest $73,263 salary that came with a large stock grant. He bought a stake in PayPal with 1.7 million shares at $0.001 per share. Within a year, the value of Thiel’s Roth had shot up from $1,664 to $3.8 million. He made other savvy investments in Facebook and Palantir Technologies Inc that made him a billionaire.

A decade after the Roth was created, the Congress under President George W. Bush allowed a limitless “backdoor” Roth conversion of traditional IRAs to Roth accounts, regardless of one’s income. The option was created as a short-term way to raise tax revenue. Investors had to pay income tax at conversion time, but they’d benefit from tax-free growth and distribution. Investment gains in Roth IRAs are never taxed and Thiel won’t have to pay taxes when he takes the money out, as long as he waits until he is 59.5 years old to withdraw.

Peter Thiel is one of many wealthy Americans who have employed this strategy and amassed tremendous Roth IRAs, including: Warren Buffet ($20.2 million) and Ted Weschler ($264.4 million) of Berkshire Hathaway, and Hedge Fund Managers Randall Smith ($252.6 million) and Robert Mercer ($31.5 million). Three other PayPal execs had IRAs worth more than $80 million each, according to ProPublica.

How Can Middle Class Earners Save for Retirement?

Not everyone will be so lucky with investments as Thiel, but knowing how to get the most out of your investments and retirement accounts is essential to building long-term wealth. Starting with the basics, Americans earning less than $140,000 a year can open a Roth IRA worth $6,000 – $7,000 a year. The money is considered taxable income when you put it into the account, but you can withdraw the money without penalty starting at age 59.5. Early withdrawals are subject to a 10% penalty.

Most traditional brokers restrict investments to publicly traded stocks, bonds, and mutual funds. While these returns can be strong (at 5-30% a year), some investors prefer to build a more diverse portfolio mix, investing in private company shares and high-value assets. One could easily turn $240,000 into more than $1 million over a 40-year period with a modest 7% rate of return.

If you want to invest a greater sum, you can open a 401(k) account. In 2022, you can set aside up to $20,500 in a 401(k). If you are an entrepreneur, you can contribute up to $61,000 as both employer/employee. An additional $6,500 is allowed in catchup contributions for plan participants over 50. Accounts can be set up as traditional 401(k) for tax advantage now — or a Roth 401(k), including a Roth Solo 401(k)  — for tax-free withdrawals later. Like a Roth IRA, a Mega Backdoor Roth 401(k) is a way to convert limitless funds into a legal tax-free saving vehicle.

Ubiquity provides low-cost, easy-to-manage small business 401(k)s to employers with less than 100 employees, and entrepreneurs. We help you choose and set up a retirement savings plan. You can use any broker you like for your investments. We’ll handle the administration of the accounts for one low, flat monthly fee, no matter how big your plan grows. Contact us for details.

Big changes are potentially afoot for retirement plans across America.

The proposed Securing a Strong Retirement Act of 2021, or SECURE Act 2.0, unanimously passed in the House Ways and Means Committee on May 5th, 2021. Next, House members will vote and send the bill onto the Senate, likely after its August recess. The Senate has its own provisions that will need reconciling before President Biden signs the final draft into law. Typically, retirement measures piggyback onto larger tax reform, budget, or end-of-year spending bills. Given the wide bipartisan support for a retirement plan bill, it’s likely some version of SECURE Act 2021 will pass this year.

What’s In SECURE Act 2.0?

Among the most impactful changes:

  • Auto Enrollment

    Employers starting new plans would be required to auto-enroll eligible workers at a savings rate of 3% of their salary, which would increase by 1% annually until their rate reached 10%. Employees would have the ability to opt-out or save even more if they desired. Old plans would be grandfathered in, and a small business 401(k) with fewer than 10 participants or startups with less than three years in business would be exempt.

  • Increased or Negated Required Minimum Distributions

    SECURE 2.0 would increase the RMD age from 72 to 73 in 2022, 74 in 2029, and 75 in 2032. Those with plans worth less than $100,000 would not be required to take out any RMD.

  • Increased Catchup Contributions

    Americans 50 years of age and older with a 401(k) or 403(b) can set aside an additional $6,500 above the annual limit as a “catchup contribution.” Those with an IRA can contribute $1,000 more. SECURE Act 2.0 would allow 401(k) and 403(b) participants to add an additional $10,000 per year at 62, 63, and 64.

  • Student Loan Matches

    For the first time, employers can count the amount of money used to pay off a student loan as a “retirement savings contribution,” eligible for the company match.

  • Roth Expansion

    Under existing law, SEP and SIMPLE plan participants cannot have a designated Roth IRA account. However, SECURE Act 2.0 allows the opportunity to make after-tax Roth contributions within the plan. All catch-up contributions would also go into a Roth account, and employers may opt to put their matching contributions into Roth, rather than pre-tax, accounts.

You can read about more of the proposed changes in greater detail on our SECURE Act 2.0 page.

How Do the House and Senate Versions Differ?

The Senate’s version of SECURE Act 2.0, titled the Retirement Security and Savings Act of 2021, contains many of the same proposals as the House bill, with a few noteworthy differences:

  • The taxpayer Saver’s Credit will be fully refundable if paid to a Roth account.
  • Spouse beneficiaries can treat inherited account balances as their own.
  • Non-spouse beneficiaries can make an indirect rollover to an inherited IRA.
  • Employer plans will be permitted to accept Roth IRA rollovers.
  • Catchup contribution increases apply to all participants 60 years of age and older (rather than just 62-64).
  • The Required Minimum Distribution requirement would be eliminated for those with less than $100,000.
  • A new tax credit for employers offering auto-enroll Safe Harbor 401(k)s with a 6% default deferral rate.

Critics Suggest Future Improvements to SECURE Act 2021

While these changes have met with broad support to expand access to retirement savings, this is unlikely to be the end of the discussion. Critics say there are a few key places where SECURE Act 2.0 comes up short.

  • Only half of small businesses offer retirement plans, which puts financial security out of reach for much of the workforce.
  • The bill doesn’t address job-hoppers who may experience long gaps of unemployment where they are unable to save anything for retirement.
  • Young workers who change jobs often cash out their retirements, pay the 10% penalty, and lose out on years of gains and compounding returns.

Universal coverage – much like the auto-IRA plans we’re seeing in New York and California – is considered by some to be a more comprehensive bridge to greater savings that can be implemented on a national level.

Ubiquity Advises Small Businesses on 401(k) Options Under Proposed SECURE Act 2.0 Bill

Questions about which small business retirement plans might be right for you? Rely on Ubiquity to help you customize a simple, low-cost 401(k) solution that perfectly fits your business’ needs. Try our free SECURE Act tax credit calculator to see how much you could save at tax time by launching a new 401(k) program in the coming year. Contact us to schedule a free consultation with a retirement specialist and explore your plan options.

Although cracks have been forming in the foundation of American retirement security for decades, the COVID-19 pandemic has only made them worse.

Even before the worldwide health crisis, many workers were recovering financially from previous economic downturns–along with facing the crumbling three-legged stool of retirement.

Now, according to a June 2021 survey, 15% of Americans say they’re postponing retirement because of the pandemic.

Let’s unpack how the “three-legged stool” of retirement—Social Security, employer pensions, and personal savings—has been slowly coming apart for decades–and what we can do to stop it.

Deconstructing the three-legged stool of retirement savings

The three-legged stool is a metaphor for how many retirement experts traditionally looked at planning for retirement. It was expected that the trio of Social Security, pensions, and savings together would provide a financial foundation for Americans’ golden years. None of these three were supposed to support retirees on its own–you need each one to build a strong retirement foundation.

As times have changed, so must retirement planning strategies. For many workers today, a nest egg built on the three-legged stool is no longer possible.

 Social Security

You may have heard that Social Security, the program created by FDR to prevent aging Americans from falling into poverty, is projected to be depleted by 2033.

How did this happen? Quite simply, there are fewer workers funding the program compared to the number of retirees benefiting from it. In 1950, there were 16.5 workers for every Social Security beneficiary. Today, there are less than 3 workers paying in for each recipient.

This ration shift is due to several factors including:

  • Increasing lifespans in the population
  • Decreases in fertility rates.
  • No change in average retirement age

This doesn’t mean Social Security will disappear completely in 20 years. As of 2019, projections indicate that taxes still being paid by younger workers will be enough to fund about 79% of scheduled benefits.


If you’re a Gen X or Millenial worker, chances are you’ve never been offered a retirement benefit that doesn’t involve you contributing a portion of your paycheck.

Defined benefit plans–such as company-sponsored pensions–once guaranteed workers a steady stream of income after their working years. Throughout the 1980s and 1990s, pensions began rapidly disappearing and being replaced by workplace savings vehicles like 401(k) plans. Today less than 1 in 5 workers have access to a pension, shifting the primary responsibility for retirement security toward the individual.

Personal Savings

As the Social Security well dries up and pensions disappear, the third leg of the retirement stool–personal savings––is more important than ever before. According to 2020 data from the Bureau of Labor and Statistics, while 71% of the American workforce has access to a 401(k), only about 55% participate. When you look at small business retirement statistics, the number of access and participation shrinks even smaller.

To help ensure you have a large enough nest egg, it’s wise to create a plan early in life—or right now if you haven’t already done so. It’s also extremely important to take advantage of workplace savings plans like 401(k) (if you have one available) along with personal tax-advantaged retirement accounts such as an IRA.

Using tools like a retirement calculator can help you figure out if you’re saving enough for the future–or if you’ll need to increase your contributions to achieve financial security in your golden years.

What is being done to address the looming retirement crisis?

We know that no single program can address the challenges facing our current retirement system—it will take several programs and solutions to make progress.


In 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed as the first major step toward enhancing American’s retirement security. Key changes from the bipartisan legislation included:

  • Increased tax credits – when small business owners set up and run retirement plans.
  • New incentives – for new plans with auto-enrollment.
  • Greater scope – long-term, part-time workers can now participate in 401(k) plans.
  • Expanded options – multiple, unrelated businesses can now partner under a SINGLE PLAN.

This congressional offering is an encouraging sign that politicians are realizing the gravity of the looming retirement crisis and are hopeful it will have a positive impact on the overall financial security of working Americans.

 State Mandates

While the Federal government has enacted some measures toward addressing the retirement crisis, many states have taken the lack of workplace access to savings into their own hands. As of August 2021, over 30 states have introduced some form of retirement legislation–and twelve states are implementing them.


State Retirement Savings Initiative Map

[image credit: AARP]

These plans tend to target small to midsize businesses in the private sector, along with low-to-moderate income households. While the rules of these programs vary greatly from state to state, all attempt to bridge the retirement gap for American workers who otherwise would not have access to an employer-sponsored plan.

Want to learn more?

The 2013 documentary Broken Eggs: The Looming Retirement Crisis In America, looks at the financial insecurity today’s retirees and pre-retirees are finding. The film focuses on why Americans are failing to adequately save for the future and the deteriorating “3-legged stool” model of retirement.

Watch below as the film profiles a diverse group of everyday Americans confronting significant retirement planning challenges alongside interviews with economists, policymakers, and financial experts.

4 Tips for 401(k) Administration in 2021

Dylan Telerski / 21 Jun 2021 / Business

401k Plan administration in 2021

As the economy continues its gradual recovery and Americans look forward with cautious optimism to the end of the pandemic, many have questions about the right moves to make with their retirement savings plan. Here are some tips for how to maximize your 401(k) in 2021.

1. Use a retirement calculator to make sure you’re saving enough.

If you’re in the dark about your 401(k) plan, check your most recent 401(k) statement, which may be on paper or delivered electronically. If you don’t have one of these statements handy, ask your Human Resources Department or investment manager. Then you’ll have the information you need to use an online tool – like Ubiquity’s 401(k) calculator – to see the possibilities.

  • What will your savings be when you retire?
  • How much should you be saving for retirement to live the lifestyle you desire?
  • If you put away a little more each pay period, how big an impact will it have years later?
  • What happens if you withdraw some of your retirement savings early?

All these questions can be answered in just a few minutes with a free online retirement calculator.

2. Mitigate risk of CARES Act borrowing.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was the rescue plan many Americans needed in 2020, but it was not free money. The CARES Act allowed qualified individuals to withdraw up to $100,000 from their 401(k) plans, penalty-free and authorized delayed repayments (within three years). Normally an early withdrawal would incur a 10% penalty. It also increased the amount a person could borrow (the lesser of $100,000 or up to 100% of the balance). However, it is important to remember income tax is still due on the withdrawal, though the bill can be minimized or delayed.

If you took advantage of the CARES Act retirement withdrawal in 2020, here’s what you need to do:

  • Start paying your taxes. Report one-third of the distribution on your income tax returns for 2021, 2022, and 2023. So if you borrowed $9,000, you’d pay taxes on $3,000 worth of the distribution over the next three years. This could be the best option if you’re still struggling financially.
  • Avoid having to pay taxes at all. If you can put the money back into your account over the next three years, you can avoid paying taxes on your withdrawal. If you took out $9,000, you could repay $3,000 back into your account in 2021, 2022, and 2023 – and you’ll owe $0 in taxes. This is the best option if you’ve recovered from the financial hit of the COVID-19 pandemic.
  • File an amended tax return. It’s still possible to avoid paying taxes, even if there is great uncertainty this year. Start by paying a third of your tax obligation. If by 2023 you are able to repay your account, you can file an amended return and get the taxes you’ve paid returned in a refund from the IRS.
  • Pay the whole bill up front. If your income for the year is very low, putting you into a lower tax bracket, it might be more advantageous to pay the entire tax bill this year. Some people went from a 22% tax rate down to 12% due to unemployment. In that case, it could mean a $900 tax bill difference on that $9,000 borrowed.

Failure to take care of the IRS obligations of CARES Act borrowing will result in a surprise tax bill in 2023 and hefty penalties that accumulate month after month.

Please note: Ubiquity is not a tax advisor and does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only.. 

3. Contribute more to your 401(k) plan.

Even if you do not have the financial resources to comfortably reach the $19,500 maximum 401(k) contribution for 2021, there are still a number of ways you can contribute more to your retirement this year:

  • Aim to contribute 1-5% more each pay period.
  • Increase your contribution when you get a bonus or a raise.
  • Make sure you can at least reach the company match (if applicable) as this is free money that can double savings.
  • Plan participants 50 years of age or older can contribute an additional $6,500 above this maximum limit to catchup in 2021.

4. Review your plan fees.

Fees can eat away at your portfolio balance over time. You may not have full say over investment fees if your employer manages your plan. If you have a small business 401(k) or solo 401(k), you could be overpaying for your plan administration. The lowest-cost plans, like Ubiquity’s, assess a low, flat, monthly fee for service. However, some 401(k) administrators charge per eligible participant or a percentage as an Assets Under Management (AUM) fee that puts more money in the administrator’s pocket as your balance grows over time. Administrators and investment managers can also charge expensive fund trading fees or loan servicing fees.

One way to bring down the cost is to request that your plan manager add low-cost index funds and ETFs as investment options; investing in funds with low annual fees could potentially boost a nest egg by hundreds of thousands of dollars by retirement time.

Locate your plan’s summary annual report and look under the basic financial statement section to see the total plan expenses and benefits paid. Subtracting the benefits paid from the total plan expenses will give you an idea of what you’re paying for administration. If you divide that number by the total value of the plan, you’ll see your administrative cost percentage. The average American pays between 0.37% and 1.42% in plan fees. If you’re paying a percentage that’s too high, it’s time to consider switching your 401(k) plan administrator. Call Ubiquity today to see how we can help.

If you are turning 50 in the 2021 calendar year or you’ve hit this milestone already, you can save a maximum of $26,000 in your tax-advantaged 401(k) plan. Participants 49 and under are only allowed contributions totaling $19,500.

If you’re getting close to retirement and looking for a way to save a little extra this year, the news is good. There is a special “catchup” provision that allows retirement savers over 50 to put away $6,500 extra in 2021 over the standard maximum.

How Much Can a Person 50 and Over Contribute to a 401(k) in 2021?

While the catchup contribution allowance remains a fixed $6,500 in 2020 and 2021, this amount does tend to jump in $500 increments every three to five years. From 2002-2006, the catchup contribution increased by $1,000 every year.

The catchup contribution is a helpful savings tool, assuming that Americans may not have been so diligent about funding their retirement accounts when they were younger and earning less. Saving the additional $6,500 catchup from 50 to 65 can potentially result in an extra $50,000 to $100,000 in total savings.

What Changed in 401(k) Limits From 2020-2021?

The thresholds for maximizing traditional IRAs, Roth IRAs, and the Saver’s Credit all increase in 2021, as does the maximum employer/employee contribution.

Here’s where someone 50 or over can benefit, particularly high earners:

  • The phase-out range for a traditional IRA increased from $65-75K in 2020 to $66-76K in 2021. If a married couple files jointly and the spouse is covered by a retirement plan, the phase-out range is $105-125K, up from $104-124K in 2020. For a married couple filing jointly where the spouse is not covered by a retirement plan, the range is $198-208K, up from $196-206K in 2020.
  • People saving with a Roth IRA are subject to contributions based on income. Participants with an adjusted gross income less than $125,000 (single) or $198,000 (married/joint) are eligibile for the $6,000 maximum contribution in 2021. An extra $1,000 can be contributed by participants who are over 50.
  • The Saver’s Credit threshold for low and moderate income workers is $66,000 for married couples filing jointly (up from $65,000 last year) or $49,500 for head-of-household filers (up from $48,750), and $33,000 for singles or married filing separately (up from $32,500).
  • The employer/employee maximum, also the Solo 401(k) maximum, increased from $57,000 to $58,000.

Who Is Considered a ‘High Earner’ or ‘Highly Compensated Employee’ in 2021?

If you’re participating in a small business 401(k), your earning status may determine the maximum you can contribute to your 401(k).

In 2021, a Highly Compensated Employee (HCE) is defined as:

  • Someone owning more than 5% of the company.
  • Someone earning at least $130,000 in 2020 (up from $125K in 2019) from the business.
  • Someone who ranks in the top 20% of highest-paid workers in the company (if applicable).
  • A spouse, child, grandparent, or parent of someone who owns more than 5% of the same company.

If you’re an HCE in your fifties, you’ll be limited by your plan’s HCE maximum. Generally speaking, contributions made by HCEs cannot be “excessive” when compared to those of non-HCEs. For instance, if the average plan contribution by non-HCEs is 4%, then the most an HCE can contribute is 6%. So, say you make $150,000 and want to max out your contribution at $26,000. You may find the most you can contribute is $9,000 (6% of your salary). If you contribute too much, the excess will be refunded to you, and you’ll have to pay taxes on that amount. The purpose of 401(k) contribution limits for high earners is to ensure that the 401(k) plan does not unfairly discriminate against the average worker. There are ways around this limit – for instance, you may switch to a Safe Harbor plan and make employer contributions to all plan participants.

Contact Ubiquity to learn more about setting up a 401(k) for your small business. We provide low-cost, easy-to-manage retirement plans to help employers and employees reach their savings goals.

A Small Business Owner’s Guide to CalSavers

Answering your top questions about California’s retirement savings program vs. alternative plans

In an effort to help Californians save for a financially secure future, the state of California is rolling out an initiative requiring all employers with five or more employees offer some type of retirement plan for their workers.

CalSavers—the state-sponsored plan—offers a basic Roth IRA to help employees building their retirement savings. But with low contribution limits, limited investments, and limited tax advantages, is it the best solution for empowering your team’s financial future?

At Ubiquity Retirement + Savings, we’ve been helping small businesses and their employees grow their nest eggs for over two decades with affordable, customized 401(k) solutions. While we believe the state’s program is an important step toward ending the looming retirement crisis in California, a 401(k) might be better alternative for your small business and your employees’ futures.

Why is the state of California offering a retirement plan?

55 million American workers—more than 40% of full-time private-sector employees—don’t have access to a workplace retirement savings plan.

Why is this such problem?

As very few employers offer pensions and Social Security is drying up —with funds expected to be depleted as soon as 2035, it’s more responsibility is for saving falls more on the individual than ever before.

Since 2012, at least 45 states have implemented or considered establishing state-facilitated retirement savings programs–with the states of Oregon, Illinois, and our home state of California leading the charge.

In July 2019, California began rolling out CalSavers, the state-sponsored IRA program for the 7.4 million private-sector workers in the state who do not have access to an employer-sponsored retirement savings plan. As of April 30, 2021,  more than 10,000 employers were registered allowing nearly 140,000 individuals to save for their future.

We are rapidly approaching the next CalSavers deadline on June 30, 2021–employers in California with more than 50 employees will be required to enroll in the state-run Roth IRA or offer a private option.

How does CalSavers work?

CalSavers is an automatic-enrollment, payroll deduction Roth IRA. We know this sounds like a lot of financial jargon–so let’s breakdown what that means.

Automatic Enrollment

This means, if your business opts into the state provided IRA, after a 30-day grace period, eligible employees will be automatically start saving for the future through a 5% contribution from their payroll.

How does this work in practice?

Added employees will a notification from CalSavers and will have 30 days to decide to customize their account, opt out of the program, or be automatically enrolled with the standard savings choices.

Payroll Deduction

This means participating employees contribute a portion of their salary into their IRA automatically from each paycheck.

Roth IRA

A Roth IRA is an individual retirement account where the saver pays taxes on money going into your account, and (if you meet certain IRS criteria) all future withdrawals are tax-free.

Roth IRAs have a couple important rules and restrictions to keep in mind.

  • You can’t contribute to a Roth IRA if you make too much money. The income limit for singles in 2021 is $140,000.
  • The amount you can contribute each year changes, based on inflation. In 2021, the contribution limit is $6,000 a year unless you are age 50 or older—in which case, you can deposit up to $7,000.

Click here to read more about 2021 contribution limits

How much does CalSavers cost my business?

There are no employer fees in the CalSavers program–nor are you allowed to make tax deductible matching contributions, as you could in a 401(k) plan.

Your employees, on the other hand, will pay annual asset-based administration fee of 0.825% to 0.95%, depending on their investment choices. These fees will be pulled directly from their assets in their account.

What happens if an employer does not register for a qualified plan by the deadline?

If your business does not register for CalSavers, or an alternative qualified private retirement plan, you may be charged a a $250 penalty per employee starting 90 days after the deadline. The fine increases to $500 per employee 180 days after the deadline.

What are the benefits of enrolling in the CalSavers?

There are several advantages for companies to choose the California’s IRA product including:

  • No cost to the employer
  • No fiduciary risk
  • No investment management responsibilities.

What are the potential drawbacks of enrolling in California’s state provided option?

The access to workplace retirement savings plans offered by Calsavers is a big step forward in solving the looming retirement crisis. However, there are significant drawbacks when compared to alternative eligible 401(k) plans from a private provider like Ubiquity Retirement + Savings.

  • The contribution limit for a 401(k) is more than three times higher than that of an IRA.

Higher contribution rates allow savers to take advantage of the power of compound interest, meaning the more money that is saved, the more it can grow over time.

  • Missing out on significant tax benefits

Did you know small businesses that sponsor retirement plans for their employees are rewarded by the government? Thanks to the SECURE Act of 2019, small businesses can qualify for up to $16,500 in tax credits over a three-year period by starting a qualified retirement plan, such as a 401(k) plan, with auto-enrollment. Employers choosing the state provided option are not eligible for these benefits.

  • CalSavers charges your employees asset-based fees.

Currently CalSavers does not offer the choice to select a flat-fee program, which provides more transparency and ultimately lower costs as savings accumulate. By charging an asset-based fee, your employees are increasingly penalized based on how much they save.

What are the alternatives to the CalSavers program?

Businesses can offer a qualified retirement plan from a private provider, which could allow for more savings while providing tax incentives and greater customization.

Let’s see how the state mandate IRA stacks up against Ubiquity’s most popular small business savings vehicle.

CalSavers IRA

Ubiquity 401(k)

Maximum employee annual contribution amount



Additional annual employer contribution limit

Not offered

Yes, up to an additional $40,500¹

Flat fees that don’t increase with your account balance

No, asset-based fees

Yes, flat fees

$500 credit to offset setup costs2



Flexible auto-enrollment and vesting schedules



Investment guidance based on individual risk tolerance



Employee enrollment meetings and education



Auto-enrollment and escalation

Required at mandated levels

Optional and flexible

Customizable investment lineups



  1. This limit is subject to cost-of-living increases for later years (for prior years, refer to this cost-of–living adjustment table.)

  2. Available to eligible employers who have less than 100 employees who received at least $5,000 in compensation in the previous year, had at least one participant who was a non-highly compensated employee, and in the last 3-years did not contribute to a benefit plan for your employees through a plan sponsored by you or a member of a controlled group that includes you.


Choose the better path to savings

If you’re looking for the maximum savings potential and tax benefit, Ubiquity provides customizable 401(k) plans that act as a CalSavers alternative. For over two decades we have pioneered flat-fee retirement plans, designed for small businesses, all delivered online to you and your employees. That means no hidden fees or AUM charges in the fine print. We have helped hundreds of thousands of employees save towards their future.

The content of this blog is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. Be sure to consult a qualified financial adviser or tax professional for official guidance.   

If you’re a high earner in 2021, you’ll likely want to maximize the amount of money set aside for retirement. 401(k) plans are tremendous vehicles for producing wealth over time, though there are maximum limits established by the Internal Revenue Service to ensure the wealthiest Americans do not use their retirement plans to evade their tax obligations and to ensure employers are not setting up their plans simply to benefit the top corporate elite. The maximum 401(k) contribution changes from year to year. Get the latest numbers here!

2021 Maximum Contribution Limits for High Earners

There are general maximum 401(k) contribution limits that apply to both high and low earners:

  • Annual Employee Contribution (Under 50): $19,500
  • Annual Employee Contribution (50+): $26,000
  • Employer/Employee Maximum (Under 50): The lesser of 25% of the plans’ total eligible salary OR $58,000
  • Employer/Employee Maximum (50+): The lesser of 25% of the plans’ total eligible salary OR $64,500
  • Maximum Compensation for Employee: $290,000

The $290,000 maximum = 25% of a $232,000 salary + the maximum employer contribution of $58,000.

High Earners Impact a 401(k) Plan’s Compliance With ERISA

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that protects individuals by ensuring equal opportunity access to company-sponsored retirement plans. To remain compliant and pass annual nondiscrimination tests, so-called “Highly Compensated Employees” generally cannot contribute more than 2% above their salaries than non-Highly Compensated Employees. So, if the non-HCE group contributes 5% of their combined salary to the company retirement plan, the HCEs cannot contribute more than 7% of their combined salary.

What’s Changed Since 2020?

While the $19,500 individual limit and $6,500 catchup contribution remain the same, changes include:

  • The maximum employer/employee contribution rate increased by $1,000 from 2020 to 2021.
  • The maximum income threshold of $290,000 increased by $5,000 from 2020 to 2021.

There have been no changes to the IRS definition of a “highly compensated” or “key” employee.

Are You a High Earner in 2021?

The IRS defines a Highly Compensated Employee as someone who meets at least one of the following:

  • Owns more than 5% of the business sponsoring the plan at any point within the last year, or has a spouse, child, and grandparents working for the company who collectively own 5+% of the business.
  • Made more than $130,000 in compensation during 2020 (Highly Compensated Employee). Compensation includes paycheck income, overtime, bonuses, commissions, and 401(k) salary deferrals.
  • Ranks among the Top 20% of salaries paid out by the company.*

*This only applies if the Top Paid group is elected in the plan document, please see consult your specific plan’s details.

Example of How a Maximum 401(k) Contribution Limit Applies to a High Earner

Here’s how a 401(k) maximum limit might play out in the real world:

  • Age: Under 50
  • Your annual salary: $400,000
  • Employer’s Plan: 5% match
  • Individual Contribution: $19,500
  • Employer Match: $14,500 (5% of $290,000 maximum)

So, rather than receiving 5% of your salary – which would be $20,000 – the match is limited to the upper threshold of $290,000 set by the IRS in 2021. This amount may increase next year, or the year after, based on cost of living adjustments.


Are There Additional Ways to Save for Retirement?

In addition to funding your 401(k) to the max, you can also contribute up to $3,600 into an individual Health Savings Account (HSA) or $7,200 for a family HSA, plus $1,000 extra if you’re over 55.

High earners may also invest as much as they’d like in stocks, bonds, mutual funds, exchange-traded funds, and real estate investment trusts – though they will have to pay taxes on the money invested, as well as capital gains taxes on the earnings.

Contact Ubiquity Retirement + Savings to find out which of our affordable, hassle-free small businesses 401(k)s are right for you and your employees. You can count on a low, transparent monthly fee that stays the same, regardless of your plan balance or participation numbers.


Read Ubiquity’s 3 Steps to Building Financial Security in an Economic Downturn

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San Francisco, CA 94104
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© 2022 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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