It’s November 2020 and we are in the middle of a once in a century global pandemic. Long lines at grocery stores, toilet paper is out of stock and we spend endless hours working from home and juggling kid’s Zoom schedules. Some days are easier than others, and it’s easy to get swept up in the hysteria of the world ending, but one thing is for sure – we will get through this and we will return to normal; at least a new normal.
While there are certain things that will never be the same – there is one constant in our lives – the need to save for retirement. So, let’s take a look at 401k limits for the new year:
2021 IRS 401k limits
- $19,500 – Deferral limit. No change from 2020.
- $6,500 – Catch-up contributions for those age 50 and over. Up $500 from 2020.
- $58,000 ($64,500 including catch-up contributions) – Overall limit on contributions. Up $1,000 from prior year, this is the maximum that you and your employer can contribute per year. For example, let’s say you are 35 yrs old, contribute the maximum $19,500 and your employer match is $5,500. This means you can contribute an additional $33,000 per year ($58,000 – $19,500 – $5,500 = $33,000).
For additional resources, visit the IRS 401k webpage https://www.irs.gov/retirement-plans/401k-plans