2021 Employer-sponsored Retirement Plan Benefit and Contribution Limits Announced
On October 26, 2020, the Internal Revenue Service (IRS) announced benefit and contribution limits for employer-sponsored retirement plans for the 2021 tax year. The chart below summarizes the 2021 limits, with 2020 limits included for comparison. This information is available on the Benefits & Contribution Limits page in the BA Guide.
| Plan / Limit | 2021 | 2020 | Code Section |
|---|---|---|---|
| 401(k) Pension Plan | |||
| Maximum annual compensation for calculating employer contributions | $290,000 | $285,000 | IRC §401(a)(17)/404(I) |
| Compensation limit for the definition of highly compensated employees | W-2 greater than $130,000 in 2020 | W-2 greater than $125,000 in 2019 | IRC §414(q)(1)(B) |
| Maximum annual additions (employer plus all employee contributions) | Lesser of total compensation; or $58,000 | Lesser of total compensation; or $57,000 | IRC§415(c) |
| Maximum amount of elective deferrals | $19,500 | $19,500 | IRC §402(g)(1) |
| Age 50 and over catch-up contributions | $6,500 | $6,500 | IRC §414(v) |
| FICA taxable wage base (OASDI) | $142,800 | $137,700 | n/a |
| Retirement Security Plan | |||
| Maximum annual compensation for calculating benefit accruals | $290,000 | $285,000 | IRC §401(a)(17)/404(I) |
| Maximum annual annuity (payable in life only form of benefit); Adjusted lower for other forms of benefit and for commencement before age 62 | $230,000 | $230,000 | IRC §415(b)(1)(A) |
| 457(b) Plans* (For tax-exempt cooperative and governmental plans) | |||
| Maximum amount of elective deferrals and employer contributions | $19,500 | $19,500 | IRC §457(b)(2)/457(e)(15) |
| Special catch-up contributions (allowed in the three years prior to normal retirement age) | Lesser of 2x the annual deferral limit; or annual deferral limit plus the eligible amount not contributed in prior years | IRC §457(b)(3) | |
| Age 50 and over catch-up contributions (for governmental plans only) | $6,500 (only if not using special catch-up contribution option) | $6,500 (only if not using special catch-up contribution option) | IRC §414(v) |
*These typically include Executive Compensation 457(b) Plans, Global Executive Compensation Plans and Governmental Deferred Compensation 457(b) Plans.
Co-ops and participants are encouraged to contact your tax adviser for more information.
Full details on the 2021 adjustments are available on the IRS website (see Notice 2020-79). By early November, NRECA’s Retirement Security Plan projection calculator will be updated to reflect these 2021 benefit and contribution limits for benefit estimates.
Contact your NRECA field representative with questions about the contribution limits or other plan features. For questions about 457(b) Plans, contact the Deferred Compensation Program team at 703.907.6375 or deferredcomp@nreca.coop.