The Macro View

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The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021 and after a year full of change there will be little changes to the limits next year.

Important limits for Plan Sponsors to be aware of:

401k Plan Limits

20212020
Maximum Employee Deferral$19,500$19,500
Catch-Up Contribution Limit$6,500$6,500
Maximum All Contributions*$58,000$57,000
Annual Compensation Limit$290,000$285,000
HCE Income Definition$130,000$130,000
Key-Employee Income Definition$185,000$185,000
*Overall cap, including the $19,500 (pre-tax or Roth in any combination) salary deferrals plus any employer contributions and employer after tax contributions (if allowed). Does not apply to catch-up contributions.

Important limits pertaining to individuals (outside of 401K):

TRADITIONAL IRA LIMITS

20212020
Contribution Limits$6,000$6,000
Catch-Up Limit$1,000$1,000
Eligibility: Pre-Tax Cont. (if saver also covered by workplace plan)
Single$66,000 – $76,000$65,000 – $75,000
Married Filing Jointly$105,000 – $125,000$104,000 – $124,000
Eligibility: Pre-Tax Cont. (if spouse covered by workplace plan)
Married Filing Jointly$198,000 – $208,000$196,000 – $206,000

ROTH IRA LIMITS

20212020
Contribution Limits$6,000$6,000
Catch-Up Limit$1,000$1,000
Eligibility: Income Phase-Out Limits
Single$125,000 – $140,000$124,000 – $139,000
Married Filing Jointly$198,000 – $208,000$196,000 – $206,000

SAVER’S CREDIT

20212020
Single$33,000$32,500
Married Filing Jointly$66,000$65,000
The income limit for the saver’s credit for low and moderate-income workers

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