Broker Check

October 2020

2021 Dollar Limits for Retirement Plans, IRAs, & HSAs

The contributions and retirement benefits for qualified retirement plans and Individual Retirement Arrangements (lRAs) are subject to certain limits that are adjusted by the Secretary of the Treasury annually subject to cost-of-living. Highlighted below are the various 2020 and 2021 limits that impact IRA and retirement plans.

Compensation Limits

Compensation Limit$285,000$290,000
Defined Contribution §415 Limit$57,000$58,000
Defined Benefit §415 Limit$230,000$230,000
Key Employee Officer$185,000$185,000
Highly Compensated Employee$130,000$130,000
Governmental Plan Compensation Limit$425,000$430,000
ESOP §409(o) Limits$1,150,000

Deferral and Catch-up Contribution Limits

401(k), 403(b), 457(b) Plan Deferral Limit$19,500$19,500
401(k), 403(b), Governmental457(b) Catch-up Limit$6,500$6,500
SIMPLE Plan Deferral Limit$13,500$13,500
SIMPLE Plan Catch-up Limit$3,000$3,000

IRA Limits

The limit on contributions to a traditional or Roth IRA will remain unchanged in 2021 at $6, 000. The limit that applies to IRA catch-up contributions (contributions for individuals age 50 and older) remains at $1,000.

Social Security

The Social Security Administration (SSA) announced an increase in the taxable wage base (TWB) for 2021 to $142,800 (was $137,700 in 2020). Workers pay Social Security tax on wages up to the TWB and some retirement plans use the TWB when allocating contributions or calculating benefits.

HSA Contribution Limits

Although not a formal retirement plan, health savings accounts (HSA) often factor into retirement savings. The IRS announced the following 2021 limits. These apply to individuals under a high deductible health plan (HDHP). The minimum deductibles and maximum out-of-pocket expenses the IRS uses to define HDHPs are outlined below, as well.

HSA Contribution Limits$3,550$3,600$7,100$7,200
Minimum Deductible for HDHPs$1,400$1,400$2,800$2,800
Maximum Out-of-Pocket Expenses$6,900$7,000$13,800$14,000