Last week, the IRS issued Notice 2020-79, defining 2021 contribution limits for pension plans and other retirement-related items. Some key items for 2021:
- Deferrals for 401(k) and 403(b) plans remains at $19,500.
- Catch-up contributions for employees who are 50 years old or older remains at $6,500.
- The highly compensated threshold also does not change from 2020 and is $130,000.
- The limitation regarding SIMPLE retirement accounts remains unchanged at $13,500.
- The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
- Income subject to Social Security withholding will move to $142,800, up from $137,700 in 2020.
Refer to the Notice, or consult your tax professional for more information.