2021 Dollar Limits on Compensation and Benefits

The Internal Revenue Service (IRS) has announced 2021-dollar limitations on benefits, contributions, and compensation. The Internal Revenue Code (Code) affords tax benefits for employers that sponsor qualified plans and for employees who participate in such plans. In exchange for these tax benefits, the Code places limits on the contribution and benefit amounts. The IRS makes annual cost-of-living adjustments to these limits.

Important Changes:

• Total annual limit on employer and employee contributions will rise
• The annual limit on compensation will increase
• Change to annual amount that individuals can contribute to health savings accounts
• Social Security Administration change in the maximum amount of wages subject to Social Security taxes

To see the limits and changes from 2020 to 2021, please visit the Venable website here.