IRS Employee Benefit Plan Limitations for 2021 for Health and Welfare and Retirement Plans

It is the time of year when the IRS issues next year’s limits for retirement plans. To assist employers with their benefit plans, we have prepared the chart below showing the most common 2021 limitations. None of the changes outlined below come as a big surprise. However, the 2020 election cycle has the potential to affect these limits, depending on what the legislative agenda and regulatory regimes look like in 2021.

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HEALTH AND WELFARE BENEFIT PLANS
	2021 Limit	2020 Limit	Difference
Health Care Flexible Spending Account (Health FSA) and Limited Scope FSA-Maximum Deferral	$2,750	$2,750	Unchanged
Health FSA and Limited Scope FSA-Carryover	$550	$550* *Raised mid-year from $500	Unchanged
Dependent Care Assistance Program (DCAP)	$5,000 – Married $2,500 – Single	$5,000 – Married $2,500 – Single	Unchanged Unchanged
Health Savings Account (HSA) Contributions	$3,600 – Employee Only $7,200 – Family	$3,550 – Employee Only $7,100 – Family	↑$50 ↑$100
Health Savings Account (HSA) Catch-Up Contributions	$1,000	$1,000	Unchanged
HDHP Out-of-Pocket Maximum	$7,000 – Employee Only $14,000 – Family	$6,900 – Employee Only $13,800 – Family	↑$100 ↑$200
HDHP Minimum Deductible	$1,400 – Employee Only $2,800 – Family	$1,400 – Employee Only $2,800 – Family	Unchanged
ACA Out-of-Pocket Maximum	$8,550 – Employee Only $17,100 – Family	$8,150 – Employee Only $16,300 – Family	↑$400 ↑$800
Adoption Assistance Programs	$14,400	$14,300	↑$100
Monthly Commuter Benefits	$270	$270	Unchanged
RETIREMENT PLANS
	2021 Limit	2020 Limit	Difference
401(k)/403(b)/457(b) Employee Contributions	$19,500	$19,500	Unchanged
Age 50 Catch-Up Contributions	$6,500	$6,500	Unchanged
Defined Contribution Plan Maximum Contribution	$58,000	$57,000	↑$1,000
Highly Compensated Employee Compensation Threshold	$130,000	$130,000	Unchanged
Key Employee Determination Compensation Threshold	$185,000	$185,000	Unchanged
Annual Compensation Limit	$290,000	$285,000	↑$5,000
Defined Benefit Annual Limit	$230,000	$230,000	Unchanged
Social Security Taxable Wage Base	$142,800	$137,700	↑$5,100
ESOP 5-Year Distribution Threshold	$1,165,000	$1,150,000	↑$15,000
ESOP Additional Year Threshold	$230,000	$230,000	Unchanged

IRS Employee Benefit Plan Limitations for 2021 for Health and Welfare and Retirement Plans

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