Contribution Limits

Corporate Retirement - The Trust Company of Tennessee

401(k) Contribution Limits

The maximum amount of salary that an employee can defer to a 401(k) plan, whether traditional or Roth, is $19,500 for 2021 (remaining the same as 2020). Employees aged 50 and older can make additional catch-up contributions of up to $6,500 in 2021 (also the same as 2020).

The maximum joint contribution by both employer and employee is $58,000 for 2021 (up from $57,000 in 2020), or $64,500 for those aged 50 and older (up from $63,500 for 2020).

Limits for High Earners

For most people, the contribution limits on 401(k)s are high enough to allow for adequate levels of income deferral. In 2021, highly paid employees can only use the first $290,000 of income when computing the maximum possible contributions.

Employers also can provide non-qualified plans such as deferred compensation or executive bonus plans for these employees.

Source: The Basics of a 401(k) Retirement Plan (investopedia.com)