2021 Qualified Plan Cost of Living Increases, 2021 Social Security Taxable Wage Base
By Mary Ellen Schill
October 26, 2020
On October 26, 2020 the Internal Revenue Service announced the cost-of-living adjustments for the various qualified retirement plan limits. Some of the limits shown below have increased from last year while others remained unchanged.
| Qualified Plan Limit | Cost-of-Living Adjustments |
| 401(k) and 403(b) elective deferral limit | 2020 – $19,500
2021 – $19,500 |
| $200,000 compensation limit | 2020 – $285,000
2021 – $290,000 |
| $160,000 defined benefit limit | 2020 – $230,000
2021 – $230,000 |
| $40,000 defined contribution limit | 2020 – $57,000
2021 – $58,000 |
| $80,000 definition of highly compensated employee | 2020 – $130,000
2021 – $130,000 |
| SIMPLE IRA deferral limit | 2020 – $13,500
2021 – $13,500 |
| Code Section 457 deferred compensation plan deferral limit | 2020 – $19,500
2021 – $19,500 |
| Code Section 414(v) catch-up contribution limit for employee deferrals | 2020 – $6,500
2021 – $6,500 |
All of the above are plan year limits (i.e., for the plan year which begins in 2021), with the exception of the Code Section 401(k) and Code Section 403(b) elective deferral limit, which is a calendar year limitation.
In addition, the Department of Health and Human Services has set the maximum taxable wages for the OASDI portion of the social security tax at $142,800 for 2021, which is an increase from the 2020 limit of $137,700.
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