2021 Retirement Plan Contribution Limits
Author: Siân Killingsworth / 26 Oct 2020 / 401(k) Resources, IRA Resources, Retirement News
Curious how much you can invest toward your retirement in 2021?
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The IRS has announced the 2021 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 won’t increase from 2020 to 2021, there is still some good news for retirement savers. The maximum income levels allowed to make deductible contributions to traditional IRAs and to contribute to Roth IRAs, have both increased for 2021.
Let’s take a look at the updated limits below:
2021 401(k) and 403(b) individual contribution limits (IRS 402(g) Limit)
Age 49 and younger
$22,500
Age 50 and older
Additional $7,500
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 2021, this limit has increased from $57,000 to a new maximum of $58,000.
Every plan is different, so it’s important to refer to your Plan Document for any compensation or other applicable limits.
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2021 Highly Compensated and Key Employee definitions and limits
Key Employee Officer Compensation
$185,000
Highly Compensated Employee
$130,000
Annual Compensation Limit
$290,000
2021 Roth and Traditional IRA contribution limits
Age 49 and under
Up to $6,500 (must have earned income)
Age 50 and older
Additional $1,000
2021 Traditional IRA modified adjusted gross income limit for partial deductibility
Single
$66,000-$76,000
Married – Filing joint returns
$105,000-$125,000
Married – Filing separately
$0-$10,000
Non-active participant spouse
$198,000-$208,000
2021 Roth IRA modified adjusted gross income phase-out ranges
Single
125,000-$140,000
Married – Filing joint returns
$198,000-$208,000
Married – Filing separately
$0-$10,000
2021 Simple IRA contribution limits
Age 49 and under
$14,500
Age 50 and older
$19,000
2021 Health Savings Accounts (HSA) contribution limits
Individual (employer + employee)
$3,600
Family (employer + employee)
$7,200
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 2020-79.
