IRS Announces 2021 Cost-of-Living Adjustments
for Retirement Plans and Health FSAs

The Internal Revenue Service announced the following annual limits for retirement plans and health Flexible Spending Accounts (FSAs) for 2021.  Many, but not all, of the 2021 limits remain unchanged.  This includes the employee elective deferral limit to 401(k), 403(b), and 457(b) plans, which remains unchanged at $19,500, and voluntary employee salary reduction contributions to a health FSA, which remains unchanged at $2,750.  
Dollar Limit
 2020 2021
Defined Benefit Plan Benefit:
I.R.C. §415(b)(1)(A)
 $ 230,000 $ 230,000
Defined Contribution Plan Limit:
I.R.C. §415(c)(1)(A)		 $ 57,000 $ 58,000
401(k)/403(b) Elective Deferral:
I.R.C. §402(g)(1)
 $ 19,500 $ 19,500
I.R.C. §457(b) Deferred Compensation Plan:
(State and Local Governments and Tax Exempt Organizations)
I.R.C. §457(e)(15)
 $ 19,500 $ 19,500
Age 50 or Older Catch-Up Contribution:
I.R.C. §414(v)(2)(B)(1)
 $ 6,500 $ 6,500
Annual Compensation:
I.R.C. §§401(a)(17) and 404(I)
 $ 285,000 $ 290,000
Highly Compensated Employee:

 

 $ 130,000 $ 130,000
Employee Contribution Limit to Health FSAs (IRS Rev. Proc. 2020-45)
$ 2,750
$ 2,750
Health FSA Carry-Over Limit (IRS Rev. Proc. 2020-45)
$ 550
$ 550

 

 

The content herein is provided for educational and informational purposes only and does not contain legal advice.  Please contact our office if you have any questions about compliance requirements applicable to your employee benefit plans or other HR compliance matters.
October 27, 2020
Written by:  Robert A. West