---
title: 2021 IRS COLA Limits Announced | 401(k) & Qualified Plans
description: The IRS has released the 2021 COLA Limits, Increases include 415 Annual Additions and Compensation Limits impacting 401(k) and other retirement plans.
---

[Uniglobal Blog | ERISA, Compliance, and Administration ](https://blog.uniglobal.com)

# [2021 IRS COLA Limits Announced | 401(k) & Qualified Plans](https://blog.uniglobal.com/uniglobal/2021-cola-limits-retirement-plans)

 Written by [Uniglobal](https://blog.uniglobal.com/author/uniglobal) | Oct 29, 2020 2:00:00 PM

### 2021 Brings Higher Annual Additions and Considered Compensation Limits

The [IRS](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions) released the cost of living adjustments (COLA) for various retirement plan limitations that will take effect on January 1, 2021. 

While [2020 brought increases ](https://blog.uniglobal.com/uniglobal/cola-increases-for-dollar-limitations-on-benefits-and-contributions)to almost every important limit we can think of, 2021 does welcome in a few impactful limit increases too.

### What's Up?

- The maximum defined contribution limit for an individual (the annual additions limit) has increased to **$58,000**. 
    - This is the total amount any one individual can have contributed by or for themselves, It includes salary deferrals of $19,500 plus any employer contributions, collectively not exceeding $58,000. It is exclusive of age 50 catch-up amounts.
- The Social Security Taxable Wage Base is now **$142,800**. 
    - For retirement plans that use an [Integrated profit sharing](https://blog.uniglobal.com/everything-you-need-to-know-about-new-comparability-and-why-we-love-it) formula, for example, should know that this limit has also increased.
- The annual compensation limit (the maximum that is considered for qualified plans) has increased to **$290,000**. 
    - Compensation is used for many plan purposes, including, but not limited to, employer allocation preparation and [nondiscrimination testing](https://knowledge.uniglobal.com/compliance/non-discrimination/whats-nondiscrimination-testing).

### What's Not?

- Salary Deferral contribution limits remain unchanged at **$19,500**. 
    - This limit covers 401(k), 403(b), and 457(b) plans. It applies to plans offering Pre-Tax Elective Deferrals and/or Roth Elective Deferrals. A plan that provides for both still caps the total employee contributions (pre-tax, Roth, or a combination of the two) at this limit. 
- Catch-up contributions, remains unchanged at **$6,500**. 
    - Catch-up in this instance refers to the salary deferral contributions of plan participant turning 50 or who are over age 50 in 2021.

| **Plan Section Limit** | **2020** | **2021** |
| --- | --- | --- |
| Maximum Defined Contribution Annual Additions | $57,000 | **$58,000** |
| Salary Deferral 401(k)/403(b) Limit | $19,500 | $19,500 |
| Catch-Up Limit | $6,500 | $6,500 |
| Maximum Compensation for Retirement Plan Purposes | $285,000 | **$290,000** |
| HCE Compensation Limit | $130,000 | $130,000 |
| Key Employee Officer | $185,000 | $185,000 |
| Key Employee 1% Owner | $150,000 | $150,000 |
| Social Security Taxable Wage Base | $137,700 | **$142,800** |

**More Information on COLA Limit Increase**

Learn more about these increases and how they impact your retirement plan by contacting [Uniglobal](https://www.uniglobal.com/connect/) and your Uniglobal consultant.

Additional information on limit changes for 2021 can be found in [IRS Notice 2020-79](https://www.irs.gov/pub/irs-drop/n-20-79.pdf). The IRS page [COLA Increases for Dollar Limitations on Benefits and Contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions) expands on the highlights in this post. The IRS also provides a tool if you’d like to get a [Retirement Savings Check-Up](https://www.irs.gov/retirement-plans/mid-year-retirement-savings-check-up).

 

[View full post](https://blog.uniglobal.com/uniglobal/2021-cola-limits-retirement-plans)

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