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 |
$3,550 – Employee Only |
↑$50 ↑$100 |
Health Savings Account (HSA) Catch-Up Contributions |
$1,000 |
$1,000 |
Unchanged |
HDHP Out-of-Pocket Maximum |
$7,000 – Employee Only |
$6,900 – Employee Only |
↑$100 ↑$200 |
HDHP Minimum Deductible |
$1,400 – Employee Only |
$1,400 – Employee Only |
Unchanged |
ACA Out-of-Pocket Maximum |
$8,550 – Employee Only |
$8,150 – Employee Only |
↑$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 |
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