2021 Retirement Plan Limitations Adjusted

On October 26, 2020, the Internal Revenue Service (IRS) released Notice 2020-79, which announced adjustments affecting dollar limitations for retirement-related items for the 2021 plan year.

This notice increased “the income ranges for determining eligibility to make deductible contributions to traditional Individual retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit.”

An important highlight of the notice is that for the 2021 plan year, an employee who earns more than $130,000 in 2020 will be considered a Highly Compensated Employee, and an employee who earns more than $130,000 in 2021 will be considered a Highly Compensated Employee for the 2022 plan year.

You can access a full list of the new contribution limits here, and you can read the entire Notice 2020-79 here.

To learn more about how these changes may affect you, contact your Warren Averett advisor, or have a member of our team reach out to you.