401(k) Plan Limits
| Defined Contribution Plans | 2021 | 2020 | Change |
Maximum employee elective deferral | $19,500 | $19,500 | no change |
Employee catch-up contribution (if age 50 or older by year-end) 1 | $6,500 | $6,500 | no change |
Maximum employee elective deferral plus catch-up contribution (if age 50 or older by year end) | $26,000 | $26,000 | no change |
Defined contribution maximum limit, all sources (employee + employer) 2 | $58,000 | $57,000 | +$1,000 |
Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources plus catch-up | $64,500 | $63,500 | +$1,000 |
Employee compensation limit for calculating contributions | $290,000 | $285,000 | +$5,000 |
Key employees' compensation threshold for nondiscrimination testing 3 | $185,000 | $185,000 | no change |
Highly compensated employees’ threshold for nondiscrimination testing 4 | $130,000 | $130,000 | no change |
1 The $6,500 catch-up contribution limit for participants age 50 or older applies from the start of the year for those turning 50 at any time during the year. 2 Total contributions from all sources may not exceed 100% of a participant's compensation. 3 Includes officers of the company sponsoring the plan. 4 For the 2021 plan year, as in 2020, an employee who earns more than $130,000 is an HCE. | |||
Source: IRS Notice 2020-79.
View the SHRM Online article For 2021, 401(k) Contribution Limit Unchanged for Employees, Up for Employers.
HSA and HDHP Limits
| Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs) | 2021 | 2020 | Change |
HSA contribution limit | Self-only: $3,600 Family: $7,200 | Self-only: $3,550 Family: $7,100 | Self-only: +$50 Family: +$100 |
HSA catch-up contributions | $1,000 | $1,000 | no change |
HDHP minimum deductibles | Self-only: $1,400 Family: $2,800 | Self-only: 1,400 Family: $2,800 | no change no change |
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) | Self-only: $7,000 Family: $14,000 | Self-only: $6,900 Family: $13,800 | Self-only: +100 Family: +$200 |
Source: IRS Notice 2020-32.
View the SHRM Online article IRS Announces 2021 Limits for HSAs and High-Deductible Health Plans.
Health FSA Limits
Health Care Flexible Spending Accounts (Health FSAs) and Limited-Scope (Vision/Dental) FSAs | 2021 | 2020 | Change |
Maximum salary deferral | $2,750 | $2,750 | no change |
Maximum rollover amount | $550 | Raised to $550 from $500 midyear 1 | no change from adjusted amount |
1 IRS Notice 2020-33, issued May 12, 2020.
Source: IRS Revenue Procedure 2020-45.
Update: The Consolidated Appropriations Act signed into law at the end of 2020 allows employers that sponsor health FSAs or dependent care FSAs the option of permitting participants to roll over all unused amounts in these accounts from 2020 to 2021 and from 2021 to 2022.
View the SHRM Online article 2021 FSA Contribution Cap Stays at $2,750, Other Limits Tick Up.
QSEHRA Limits
| Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) | 2021 | 2020 | Change |
Maximum payments and reimbursements through the QSEHRA | Self-only: $5,300 Family: $10,700 | Self-only: $5,250 Family: $10,600 | Self-only: +$50 Family: +$100 |
Source: IRS Revenue Procedure 2020-45.
View the SHRM Online article QSEHRAs Help Small Employers Solve the Health Care Coverage Puzzle.
Commuter Transit and Parking Limits
Qualified Transportation Benefit Tax Exclusion (monthly limits) | 2021 | 2020 | Change |
Transit passes and van pool services (employer + employee) | $270 | $270 | no change |
Qualified parking | $270 | $270 | no change |
Source: IRS Revenue Procedure 2020-45.
View the SHRM Online article Commuter Benefits Are an Investment in Employees.
Earnings Subject to Social Security Payroll Tax
Social Security (FICA) Payroll Tax | 2021 | 2020 | Change |
Maximum earnings subject to Social Security 12.4% FICA payroll tax (6.2% paid by employer and 6.2% paid by employee) | $142,800 | $137,700 | +$5,100 |
Source: Social Security Administration.
View the SHRM Online article 2021 Wage Cap Rises Modestly for Social Security Payroll Taxes.
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