IRS Limits Page

Every year, the IRS announces the latest contribution limits for retirement savings accounts (including 401(k), 403(b), certain 457(b) plans and IRA contributions), as well as Health Savings and Spending Accounts. For 2021, some limits have changed, while others remain the same. Please see an overview of the current limits listed below.

401(k), 403(b), certain 457(b) plans

Annual Deferral and Catch-up Contribution Limits

  2021 2020
Age 49 and under $19,500 $19,500
Age 50 and older catch-up* Additional $6,500 Additional $6,500
403 (b) 15 years of service catch-up** Up to an Additional $3,000 Up to an Additional $3,000
457 special election catch-up*** Up to an Additional $19,500 Up to an Additional $19,500

* Age 50 and older before year-end. If you participate in a 457(b) plan, the Age 50+ Catch-up is only available if the plan is sponsored by a governmental employer.

** The 15 years of service catch-up may apply to employees participating in a 403(b) tax deferred annuity who have had at least 15 years of service with an educational organization, hospital, home health agency, health and welfare service agency, church or convention or association of churches. The additional catch-up cannot exceed cumulatively $15,000 over the lifetime of the 403(b) participant. The additional catch-up requires a calculation to determine the available amount. If you are a 403(b) participant who is eligible for both the 15 Years of Catch-Up and the Age 50+ Catch-Up in the same year, the Internal Revenue Code requires that you first contribute the maximum permitted under that year’s 15 Years of Service Catch-Up before contributing under the Age 50+ Catch-Up.

*** This special election catch-up applies to employees participating in an eligible governmental 457(b) deferred compensation that have elected the special catch-up available in the three years prior to the year of normal retirement age. If you are eligible for both the Age 50 and older catch-up and the special election catch-up under your 457(b) plan, IRS rules do not allow you to use both in the same calendar year. IRS rules permit you to use the catch-up that lets you contribute the greater amount.

SIMPLE plans

Annual Deferral and Catch-up Contribution Limits

  2021 2020
Age 49 and under $13,500 $13,500
Age 50 and older catch-up* Additional $3,000 Additional $3,000

*Age 50 and under before year-end

Puerto Rico retirement plans

Annual Deferral & Catch-up Contribution Limits

Plan qualified only in Puerto Rico 2021 2020
Age 49 and under $15,000 $15,000
Age 50 and older catch-up* Additional $1,500 Additional $1,500
Plan dual-qualified only in Puerto Rico and U.S.** 2021 2020
Age 49 and under $19,500 $19,500
Age 50 and older catch-up* Additional $1,500 Additional $1,500

 

 

 

 

Limit on after tax contributions: 10% of participant’s maximum recognizable compensation for all years of participation in the retirement plan.

* Age 50 and older before year-end.

** Higher limits optional at plan sponsor’s election.

415(c) annual limits

The total amount you and your employer can contribute to a 401(a), 401(k) or 403(b) plan

  2021 2020
Defined Contribution Plan Annual Dollar Limit $58,000 $57,000
Defined Benefit Plan Maximum Annual Benefit $230,000 $230,000

* Defined Contribution Annual Additions Limit does not include any Age 50 and older catch-up made in that year.

Compensation limits for 401(a), 401(k), and 403(b) plans

Maximum individual compensation recognized for determining contributions

  2021 2020
General limit for compensation $290,000 $285,000
Special limit for compensation for governmental plan participants grandfathered before the 1996 plan year  $430,000 $425,000
Compensation taken into account to determine SEP Eligibility $650 $600

Highly compensated employee for 401(a), 401(k) and 403(b) plans

Check with your plan as the definition may vary based on plan design and employee population

  2021 2020
Annual Compensation threshold of at least  $130,000 $130,000

Traditional and Roth IRA

Annual Contribution Limits

  2021 2020
Age 49 and under  Up to $6,000 Up to $6,000
Age 50 and older* Additional $1,000 Additional $1,000

* Age 50 and older before year-end.

Retirement Savings Contributions Credit (Saver’s Credit)

You may qualify for a tax credit on your federal tax filing of up to $1,000 for the first $2,000 that you contribute to a qualified plan (reduced by any distribution from the plan during that year).

2021 Saver’s Credit

The amount of the credit depends upon:

  • Your adjusted gross income (AGI) reported on form 1040/1040A
  • Income tax filing status – single, head of household or married filing jointly
  • The amount you contributed to your IRA or employer-sponsored retirement plan in that tax year

Calculate Your Credit 

 

The credit phases out based on your federal income tax filing status and adjusted gross income (AGI).

 

Credit Rate Married Filing Jointly Head of Household All Others Filers*
50% of your contribution AGI not more than $39,500 AGI not more than $29,625 AGI not more than $19,750
20% of your contribution 39,501 - $43,000 $29,626 - $32,250 $19,751 - $21,500
10% of your contribution $43,001 - $66,000 $32,251 - 49,500 21,501 - $33,000
0% of your contribution more than $66,000 more than $49,500 more than $33,000

Health Savings and Spending Accounts

Health Savings Account (HSA) Annual Contribution Limits

To be eligible to contribute to a Health Savings Account, you must be enrolled in an eligible High-Deductible Health Plan (HDHP).

  2021 2020
Self-only HSA $3,600 $3,550
Family HSA $7,200 $7,100
Age 55 and older catch-up* Additional $1,000 Additional $1,000

* Age 55 and older before year-end.

Flexible Spending Account (FSA) Annual Contribution Limits

  2021 2020
Health FSA $2,750 $2,750
Limited Purpose FSA $2,750 $2,750
Dependent Care FSA $5,000*
$2,500**
$5,000*
$2,500**

* Married filing jointly or single filing as head of household

** Married filing separately

Commuter Benefits – Parking and Transit Accounts Monthly Limit on Expenses

  2021 2020
Parking $270 $270
Mass Transit $270 $270

Explanation of cost of living adjustments:

Annual deferral limit:

401(k)/403(b)/457 – The limit on elective deferrals (including Roth contributions) a participant may make during the calendar year.

SIMPLE Retirement Plans – The limit on elective deferrals a participant may make during the calendar year for the SIMPLE (Savings Incentive Match Plans for Employees of Small Employers) Retirement Plan.

Catch-up contributions:

At Age 50+ for 401(k), 403(b)* and 457* – Participants who have attained age 50 may make catch-up contributions (including Roth contributions) — after the elective deferral limit has been reached — up to the annual catch-up limit, if the plan permits.

Age 50+ SIMPLE Retirement Plan – If the plan permits, participants who have attained age 50 may make additional deferred contributions — after the elective deferral limit has been reached — up to the annual catch-up limit.

*A special additional catch-up limit applies for certain employees under 403(b) and 457 plans.

415 annual limits:

Defined Contribution plans – The total of all employer and employee contributions to the plan for the 12 month limitation year (as defined in the plan document) cannot exceed the lesser of $58,000 (as adjusted for inflation) or 100% of compensation.

Defined Benefit Plans – The maximum annual benefit a participant may receive is the lesser of $230,000 (as adjusted for inflation) or 100% of the participant’s average compensation for his highest three years of earnings.

Compensation limit:

For determining general limit for compensation – This is the maximum compensation that may be considered when determining contributions for the plan year (as adjusted for inflation).

For determining special limit for compensation for governmental plan participants grandfathered before the 1996 plan year – This is the maximum compensation that may be considered when determining contributions for the plan year (as adjusted for inflation).

For SEP eligibility – This is the minimum compensation taken into account when determining which employees are eligible for a simplified employee pension (SEP) plan (as adjusted for inflation).

Highly Compensated Employee (HCE) definition:

An HCE is any participant who owns 5% or more of the business at any time during the current or preceding year and/or any participant whose compensation in the preceding year is greater than the annual compensation limit (as adjusted for inflation). The current year’s limit is used when considering a look-back to the prior year.

AGI for Tax Credit:

The highest adjusted gross income (AGI) an individual may have to be eligible for a tax credit on their federal tax filing, based on filing status.

Health Savings and Spending Accounts:

Health Savings Account – An HSA is an employer-sponsored plan that can be used to pay for qualified medical expenses— now or in the future — when paired with a high-deductible health plan. HSAs are funded by pre-tax dollars deposited into an individual account by an employee or the employer, usually through payroll deduction.

Flexible Spending Account – An FSA is also an employer-sponsored savings and spending plan. Like an HSA, it is funded with pre-tax dollars via payroll deduction and is exempt from federal income taxes, Social Security (FICA) taxes and, in most cases, state income taxes. There are several types of FSAs. Before an employee enrolls in an FSA, they must first decide what type of FSA is needed and how much will be contributed. Any money left unspent in the FSA at the end of the year is forfeited.

IRS Circular 230 Disclosure

Any tax discussion contained in this communication was not intended or written to be used, and cannot be used by the recipient or any other person, for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on such person. Any tax discussion contained in this communication was written to support the promotion or marketing of the transactions or matter discussed herein. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

Next Steps:

Log in to your employer's retirement savings plan to review your current contribution rate. If you are saving below the 2021 IRS limit of $19,500, consider increasing your contribution to your workplace retirement savings.

This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial professional for specific advice about your individual situation.

Neither Voya® nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax advisor or attorney before making a tax-related investment/insurance decision.

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