The Internal Revenue Service announced the 2021 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits, and the Social Security Administration announced its own cost-of-living adjustments for 2021. Most of the dollar limits, including the elective deferral contribution limit for 401(k), 403(b) and 457(b) plans and the dollar limit for catch-up contributions (if age 50 or older), will remain unchanged from 2020 limits. Other limits, such as the annual compensation limit under 401(a)(17) and the maximum annual contribution limit under Code Section 415(c), will increase in 2021.
RETIREMENT PLAN LIMITS
| 2021 Limits | 2020 Limits | |
| 401(k)/403(b)/457(b) Elective Deferrals | $19,500 | $19,500 |
| Catch-Up Contribution (plans other than SIMPLE plans) | $6,500 | $6,500 |
| SIMPLE Plan Employee Deferrals | $13,500 | $13,500 |
| SIMPLE Plan Catch-Up Contributions | $3,000 | $3,000 |
| Plan Maximum Annual Contribution – Defined Contribution Plans (Section 415(c)) | $58,000 | $57,000 |
| Maximum Annual Benefit – Defined Benefit Plans (Section 415(b)) | $230,000 | $230,000 |
| Compensation Limit under Section 401(a)(17) | $290,000 | $285,000 |
| Highly Compensated Employee Definition under Section 414(q) | $130,000 | $130,000 |
| Key Employees Officer Compensation for Top-Heavy Plans | $185,000 | $185,000 |
| ESOP limit for determining the maximum account balance subject to the 5-year distribution limit | $1,165,000 | $1,150,000 |
| ESOP dollar amount used for determining the lengthening of the 5-year distribution period | $230,000 | $230,000 |
HEALTH AND WELFARE PLAN LIMITS
Health Savings Account and High Deductible Health Plan Limits
Earlier this year, the IRS announced the inflation-adjusted amounts for health savings account and high-deductible health plans for 2021. The HSA limit for self-only/family coverage will increase to $3,600 and $7,200, respectively for 2021. The maximum annual out-of-pocket expense limits for high deductible health plans for both self-only and family coverage will increase in 2021 but the minimum annual deductible will remain unchanged from 2020 limits.
Health Savings Accounts/HDHP Limits
| 2021 Limits | 2020 Limits | |
| HSA Contribution — Annual Contribution Limit | ||
| Self-Only Coverage | $3,600 | $3,550 |
| Family Coverage | $7,200 | $7,100 |
| Catch-Up Contributions (age 55 or older) | $1,000 | $1,000 |
| High Deductible Health Plan – Minimum Annual Deductible | ||
| Self-Only Coverage | $1,400 | $1,400 |
| Family Coverage | $2,800 | $2,800 |
| High Deductible Health Plan – Maximum Out of Pocket Limit | ||
| Self-Only Coverage | $7,000 | $6,900 |
| Family Coverage | $14,000 | $13,800 |
SOCIAL SECURITY WAGES BASE
Social Security Wage Base
| 2021 Limit | 2020 Limit | |
| Social Security (FICA) Wage Base | $142,800 | $137,000 |
