IRS Announces 2021 Cost-of-Living Adjustments for 401(k) Plan Limits and Thresholds

Yesterday, the IRS issued Revenue Notice 2020-79 which provides the 2021 cost-of-living adjustments for inflation as provided by the Internal Revenue Code. For plan sponsors of retirement plans, the most applicable adjustments announced in Revenue Procedure 2020-79 are listed in the following table:

401(k) Plan Limits and Thresholds
Maximum Elective Deferral Dollar Limit 2021 (new) 2020 (old)
401(k) Plan* $19,500 $19,500
SIMPLE 401(k) Plan $13,500 $13,500
Maximum Catch-Up Contribution Dollar Limit 2021(new) 2020 (old)
401(k) Plan* $6,500* $6,500
SIMPLE 401(k) Plan $3,000* $3,000
*The elective deferral limit also applies to 403(b) contracts, 457 plans, and SARSEPs under IRC §§402(g), 457(e), and 414(v).
Annual Additions 2021 (new) 2020 (old)
Annual Addition Dollar Limit on Contributions $58,000 $57,000
Compensation 2021 (new) 2020 (old)
Annual Dollar Limit on Includible Compensation $290,000 $285,000
HCEs and Key Employees 2021 (new) 2020 (old)
Highly Compensated Employee Dollar Threshold $130,000 $130,000
Key Employees Dollar Thresholds    
          Officer Group $185,000 $185,000
          More-Than-1% Owner $150,000 $150,000

Be sure to check for the latest information on all limits related to retirement, health, and welfare benefit plans as well as consumer-driven health care.