2021 401(k) Limits Published By IRS

The Internal Revenue Service (IRS) announced on October 26, 2020 that for the tax year 2021 the annual 401(k) plan contribution limit will be the same as 2020 at $19,500. This includes 403(b), most 457 plans and the federal government’s Thrift Savings Plan.

The catch-up contribution limit for employees aged 50 and over in these plans remains unchanged at $6,500 for 2021.

For highly compensated employees, the threshold for determination remains unchanged at  $130,000 in 2021.

The IRS announced this and other changes in Notice 2020-79.  This notice provides guidance for cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the tax year of 2021. Section 415(d) requires the Secretary of the Treasury to annually adjust these limits for cost-of-living increases. 

Any employees impacted may want to review their current and future deductions and make any adjustments if needed.