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Showing posts from January, 2021

2021 Dollar Limits and Thresholds for 401(k)s and Similar Plans

The IRS recently announced the 2021 dollar limits and thresholds for retirement plans, reflecting the latest cost-of-living adjustments. Here are some relevant amounts for 401(k)s and similar plans: Annual contributions. The limit on annual contributions to 401(k) and other defined contribution plans will increase to $58,000 (up from $57,000 for 2020). Compensation. The annual limit on compensation that can be taken into account for contributions and deductions will increase to $290,000 (up from $285,000). Elective deferrals. The annual limit on elective deferrals will remain at $19,500 for 401(k), 403(b) and 457 plans, as well as for Salary Reduction Simplified Employee Pension plans (SARSEPs). The annual limits will remain the same at $13,500 for Savings Incentive Match Plans for Employees (SIMPLEs) and SIMPLE IRAs. Catch-up contributions. The annual limit on catch-up contributions for individuals age 50 and over will remain at $6,500 for 401(k) plans, 403(b) contracts, 457

2021 COLAs for Popular Fringe Benefits

The IRS recently released 2021 cost-of-living adjustments (COLAs) for a wide variety of tax-related limits, including those related to many popular fringe benefits. Here are some highlights to be aware of: Health Flexible Spending Accounts (FSAs). For 2021, the dollar limit on employee salary reduction contributions to health FSAs will remain at $2,750. Qualified transportation fringe benefits. The monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will remain at $270. The combined monthly limit for transit passes and vanpooling expenses will also remain at $270. Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). The maximum amount of payments and reimbursements under a QSEHRA will be $5,300 for self-only coverage and $10,700 for family coverage (up from $5,250 and $10,600, respectively, for 2020). Adoption assistance exclusion and adoption credit. The maximum amount that may be excluded from an employee’s gr