With 2019 Taxes delayed filing to mid year this year 2020, it seems like tax season was a constant over the last 4-6 quarters. Add to that, there was a COLA (Cost of Living Adjustment) from 2019 to 2020 but not very many changes from this year, 2020 and next tax year 2021 and it seems like a puzzle.
Not to worry, here are the few changes from 2020 to 2021, again the most popular (bolded) by a long shot had very little adjustments
| Limits on Benefits and Contributions | 2021 | 2020 |
| 401(k), 403(b), and 457 Plan Elective Deferrals | $19,500 | $19,500 |
| Defined Contribution Plans | $58,000 | $57,000 |
| Defined Benefit Plans | $230,000 | $230,000 |
| SIMPLE Plan Elective Deferrals | $13,500 | $13,500 |
| IRA | $6,000 | $6,000 |
| ROTH | $6,000 | $6,000 |
| “Highly Compensated” Definition | $130,000 | $130,000 |
| “Key Employee” Definition | ||
| Officer | $185,000 | $185,000 |
| 1% Owner | $150,000 | $150,000 |
| Security Taxable Wage Base | $142,800 | $137,700 |
| Catch Up Contributions Age 50 And Older | ||
| 401(k), 403(b), and 457 Plans | $6,500 | $6,500 |
| SIMPLE Plans | $3,000 | $3,000 |
| IRA | $1,000 | $1,000 |
| ROTH | $1,000 | $1,000 |
Note, there are limitations on certain deductions from above as well as income oriented phase outs, please check with your tax professional for your specific sitiation.
Have a Great “New Deferral Limits” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
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