The Internal Revenue Service (IRS) capped off a busy year with its annual cost-of-living adjustments applicable for 2021.  A year-to-year comparison of limitations applicable to plan sponsors can be found here: 2021 Annual Limitations Chart.

Consistent with prior years, and reflecting general inflation, the IRS increased certain qualified retirement plan limitations.  For example, the contribution limitation for defined contribution plans increased from $57,000 to $58,000 for 2021 (although the contribution limitation for defined benefit plans stayed stagnant).  The annual compensation limit for purposes of Section 401(a)(17) of the Internal Revenue Code (IRC) increased from $285,000 to $290,000 (from $425,000 to $430,000 for certain governmental plans). The IRS did not, however, increase the amount of elective deferrals or catch-up contributions that can be made to defined contribution plans ($19,500 and $6,500, respectively).


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