The Internal Revenue Service (IRS) has released Notice 2020-79, containing cost-of-living adjustments for 2021 that affect amounts employees can contribute to 401(k) plans and IRAs, most of which remain unchanged.
Key limits that remain unchanged include the following:
- The employee contribution limit for 401(k) plans will remain $19,500. The catch-up contribution limit for employees aged 50 and over also remains unchanged at $6,500.
- The employee contribution limit for IRAs will remain $6,000. The catch-up contribution limit for employees aged 50 and over also remains unchanged, at $1,000.
- The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans will remain $13,500.
- The limits used to define a “highly compensated employee” and a “key employee” will remain $130,000 and $185,000, respectively.
