IRS Announces 2021 Retirement Plan Limits | Lord Abbett
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Retirement Perspectives

401(k) participants will have the same dollar limitations for 2021 as this year, still providing opportunities to increase retirement savings.

Read time: 1 minute

While 2020 has been a year of change for retirement plans after the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act last December and the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, the Internal Revenue Service (IRS) is keeping retirement plan limits for 2021 the same as 2020.

The IRS, via Notice 2020-79 on October 26, released the cost of living adjustments for retirement plans for tax year 2021, which affect dollar limitations for retirement plans and other retirement-related items.

The 401(k), 403(b), 457(b), and Thrift Saving Plan (TSP) salary deferral limitation is flat at $19,500, the same level as 2020; the age 50 catch-up contribution remains $6,500. (A catch-up contribution allows people aged 50 or older to make additional contributions to their retirement accounts.)

In the case of SIMPLE IRA plans, the maximum deferral limits remain flat, at $13,500. In addition, the catch-up for those aged 50 and older remains unchanged, at $3,000. Annual IRA contributions (traditional and Roth), as well as catch-ups, are unchanged, at $6,000 and $1,000 (age 50 plus catch-up), respectively.

Previously, the IRS announced that the Health Savings Account (HSA) contribution limits for 2021 are increasing by $50 for single coverage and $100 for family coverage. The annual limit on HSA contributions will be $3,600 for single and $7,200 for family coverage. (For more information about HSAs, listen to our podcast.)

For a complete list of 2021 plan limits and other retirement related items, see our 2021 Retirement Plan Limits Flyer.

If you have additional questions, please contact your Lord Abbett representative at 888-522-2388.


To comply with Treasury Department regulations, we inform you that, unless otherwise expressly indicated, any tax information contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (ii) promoting, marketing, or recommending to another party any transaction, arrangement, or other matter.

The information is being provided for general educational purposes only and is not intended to provide legal or tax advice. You should consult your own legal or tax advisor for guidance on regulatory compliance matters. Any examples provided are for informational purposes only and are not intended to be reflective of actual results.

The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett's products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.

401(k) is a qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on an aftertax and/or pretax basis. Employers offering a 401(k) plan may make matching or nonelective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

403(b) plan is a retirement savings plan that allows employees of public schools, nonprofit, and 501(c)(3) tax-exempt organizations to invest on a pretax and or Roth aftertax basis. Contributions to a 403(b) plan are conveniently deducted directly from your paycheck. In addition, your employer may elect to make a contribution on your behalf.

A governmental 457(b) deferred-compensation plan allows employees of states, political subdivisions of a state, or any agency or instrumentality of a state to invest money on a pretax or Roth aftertax basis through salary reductions. The employer deposits amounts withheld into an annuity, custodial, or a trust account, where the funds accumulate tax-deferred or potentially tax free in the case of Roth aftertax contributions until withdrawals commence, usually at retirement.

Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees' Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.

A SIMPLE IRA plan is an IRA-based plan that gives small-business employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an individual retirement account (IRA) set up for each employee (a SIMPLE IRA). SIMPLE IRA plans are maintained on a calendar-year basis.



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