The IRS has announced the new retirement plan limits for 2021. Most limits stayed flat, but a few increased from 2020 to 2021. Highlights include:
- The compensation limit used in determining benefits and contributions for both defined benefit and defined contribution plans is increased from $285,000 to $290,000.
- For defined contribution plans (profit sharing and 401(k) plans), the maximum annual contribution for a participant increased from $57,000 to $58,000. While this limit includes salary deferrals, it does not include catch up contributions.
As 2021 approaches, now is the time to act if you want to set up a qualified plan for a 2020 calendar tax year. If you are interested in setting up a qualified plan, please contact us.
You can find a printable version of the complete list of the new 2021 annual limits by visiting the Retirement Plan Limits page of our website.