Yearly limits for deferred compensation. Deferred compensation: voluntary contributions to a savings plan designed for retirement income; usually exempt from FIT and SIT, depending upon state regulations; includes Internal Revenue Codes 401(k), 403(b), 408(k)(6), 457(b), 501(c) and SIMPLE IRA.
2020 - 2021
|Deferred Compensation Chart|
|Type||Exempt From ****||Limit <50 Years||Limit >50 Years||W-2 Box Code|
|401(k)||FIT & SIT||$19,500||$26,000||Box 12 - D|
|After-tax Roth 401(k)||Nothing - Fully Taxable||$19,500***||$26,000***||Box 12 - AA|
|Simple IRA||FIT & SIT||$13,500||$16,500||Box 12 - S|
|403(b)/ TSA||FIT & SIT||$19,500||$26,000*||Box 12 - E|
|After-tax Roth 403(b)||Nothing - Fully Taxable||$19,500***||$26,000*||Box 12 - BB|
|408(k)(6) / SEP IRA||FIT & SIT||$19,500||$26,000||Box 12 - F|
|457(b)||FIT & SIT||$19,500||$26,000**||Box 12 - G|
|Roth 457(b)||Nothing - Fully Taxable||$19,000***||$26,000**||Box 12 - EE|
|501(c)(18)(D)||FIT & SIT||$7,000||N/A||Box 12 - H|
* There is a special catch-up election for employees who have completed at least 15 years of service with a qualified organization. Such employees are able to contribute an additional $3,000 annually, which brings the limit to $22,000 (<50) or $28,000.00. (>50). See Retirement Plans FAQs regarding 403(b) Tax-Sheltered Annuity Plans for additional details.
** Special rules may apply depending on the type of entity and how close the employee is to retirement.
*** IRS rules indicate a Roth 401(k) shares the annual limit with a 401(k) plan. A Roth 403(b) shares the annual limit with a 403(b).
for more information.
Company Contribution Limits
For company contribution limits, refer to IRS Retirement Topics - Contribution Limits or your plan sponsor.
- There are penalties and implications for over-contributing to retirement plans, tax filings, and W-2 corrections
- All corrections must be made by April 15th, otherwise, it is considered taxable income for the current year as well as the previous year and is subject to double taxation.
- The maximum amount that someone can contribute to retirement plans annually is per person and not by the employer.
- If an employee over contributes to their retirement plan, the retirement plan provider will send them a 1099R, which would get filed with their personal tax return.
- Desktop Payroll: Set up Roth 401(k) and Roth 403(b) plans
- Desktop Payroll: Set up a payroll item for retirement benefits
- Online Payroll: Retirement plan deductions/contributions.
For additional information on Employee Limits and Employer (Company) contributions or matches see the IRS resource: