The IRS recently announced the annual update of the retirement plan limits, adjusted for “cost of living”. The new limits are in effect beginning in 2021. Most significantly, the maximum annual contribution that can be made to an individual’s account in a 401k plan or other defined contribution plan (such as a profit sharing or money purchase plan) is $58,000 (a $1,000 increase), plus a 401k catch-up contribution of $6,500 if at least 50 years old. Also significantly, compensation which can be taken into account for retirement plan purposes has been increased from $285,000 to $290,000. Notably not increased is the 401k deferral contribution limit of $19,500 if less than 50 years old or $26,000 if 50 or older. ACSI (www.acsi-ny.com or mbrand@acsi-ny.com) is available to help you learn more about applicable plan limits and how to potentially maximize plan contributions.
