Time to Update Your Retirement Savings!
The 2021 retirement plan limits have recently been announced by the IRS.
These new limits are effective January 1, 2021.
The standard contribution limit for employee salary deferrals to a qualified retirement plan -- 401(k), 403(b), most 457 plans, and the government's Thrift Savings Plan -- are unchanged at $19,500 for 2021.
The "catch-up" deferral limit for these plans remains unchanged at $6,500 for 2021, so a person who is age 50 or older can defer a maximum of $26,000 in 2021.
The contribution limit for a Solo 401(k) in 2021 is increased to the lesser of (a) $58,000, or (b) 100% of the employee's salary. Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $64,500.
The contribution limits for Traditional and Roth IRAs remains at $6,000 for 2021. The catch-up contribution for a person age 50 or older similarly remains at $1,000 in 2021, for a total of $7,000.
If you're an employee and a retirement plan participant, be sure to contact your employer as soon as possible if you wish to change your retirement plan salary deferrals for 2021.
If you're an employer and either don't have a retirement plan in place or have questions about your existing one, contact us for a complimentary proposal and comparison with your current plan. You'll have happier, more satisfied employees while also saving money.
Springwater Wealth Management
6600 SW 105th Avenue, Suite 155
Beaverton, OR 97008