IRS Announces Adjusted Plan Limits For 2021

The Internal Revenue Service has announced cost-of-living-adjusted limits for 2021 that affect the operation of tax-qualified retirement plans, including 401(k) plans and certain other types of employee benefit plans, including deferred compensation plans that may be subject to Internal Revenue Code §409A. The amount by which the limits are adjusted each year is based on a cost of living index. Not all limits increase every year. In connection with the increased limits for 2021, employers should revise participant communications and election forms, amend plan documents and summary plan descriptions and update all payroll and/or human resource systems with the new dollar amount limitations.