The Internal Revenue Service (IRS) recently released the 2021 annual contribution limits for Health Flexible Spending Accounts as well as IRC Section 403(b) and Section 457(b) plans.
Health Flexible Spending Accounts
The annual limit on voluntary employee salary reductions for contributions to a health flexible spending account will be $2,750 in 2021, which remains unchanged from 2020.
| Health Flexible Spending Accounts Contribution Limits | |
| Tax Year | Annual Limit |
| 2021 | $2,750 |
| 2020 | $2,750 |
| 2019 | $2,700 |
For more information on Health FSA limits, review Revenue Procedure 2020-45.
403(b) Retirement Plans
The annual salary deferral limit will be $19,500 in 2021, which remains unchanged from 2020.
The following limits will also remain unchanged in 2021:
- If you qualify for the full amount of the lifetime catch-up, the catch-up contribution limit remains unchanged at $3,000. This brings the annual total limit for employees who qualify for the lifetime catch-up to $22,500.
- The catch-up contribution limit for employees who are age 50 or over remains unchanged at $6,500. This brings the annual total limit for employees who qualify for the age 50+ catch-up to $26,000.
| 403(b) Plan Contribution Limits | ||||
| Tax Year | Basic Deferral Limit for All Employees | Annual Limit if you Qualify for the Full Amount of the Lifetime Catch-Up (15 Years of Service). Total Lifetime Catch-Up Max of $15,000 | Annual Limit if You Qualify for the Age 50+ Catch-Up | Maximum Annual Contribution if You Qualify for Both the Age 50+ and Lifetime Catch-Ups |
| 2021 | $19,500 | $22,500 | $26,000 | $29,000 |
| 2020 | $19,500 | $22,500 | $26,000 | $29,000 |
| 2019 | $19,000 | $22,000 | $25,000 | $28,000 |
For more information on the current 403(b) limits, review the IRS article, Income Ranges for Determining IRA Eligibility Change for 2021.
457(b) Retirement Plans
The annual salary deferral limit will be $19,500 in 2021, which remains unchanged from 2020.
The following limits will also remain unchanged in 2021:
- The catch-up contribution limit for employees who are age 50 or over remains unchanged at $6,500. This brings the annual total limit for employees who qualify for the age 50+ catch-up to $26,000.
| 457(b) Plan Contribution Limits | ||
| Tax Year | Basic Deferral Limit for All Employees | Annual Limit if You Qualify for the Age 50+ Catch-Up |
| 2021 | $19,500 | $26,000 |
| 2020 | $19,500 | $26,000 |
| 2019 | $19,000 | $25,000 |
For more information on the current 457(b) limits, review the IRS article, Income Ranges for Determining IRA Eligibility Change for 2021.
Questions?
We’re here to help. If you have questions about the recent IRS updates or the impact they may have on your plan, call us at (800) 430-7999 or email us at [email protected].