Resources

ERISA Workplace Retirement Plan Limits

401k and Other Defined Contribution Plans

Cash Balance and Other Defined Benefit Pension Plans

What The Plan Limits Mean

[1] - For plan years ending after January 1 of the limitation year, the aggregate allocations to a participant's account, including forfeitures, cannot exceed the lesser of this limit or 100% of annual compensation. Example: for a plan year ending December 31, 2019, no more than $56,000 may be allocated to a participant's account.

[2] - For the calendar year, 401(k), 403(b), and 457 plan participants may defer up to this limit from their compensation. Participants who transition employers or otherwise contribute to multiple plans during a calendar year cannot exceed the limit in the aggregate. Example: in the 2020 calendar year, a participant may defer $9,500 into the 401(k) Plan for one employer and $10,000 into the 403(b) Plan for another employer, but the participant may not defer $19,500 into the 401(k) Plan and $19,500 into the 403(b) Plan. If the plan includes a Roth feature, the combined amount for both Roth and Pre-Tax is subject to this limit. Example: in the 2020 calendar year, participants may contribute $9,750 Roth + $9,750 Pre-Tax, but may not contribute $19,500 Roth + $19,500 Pretax.

[3] - For the calendar year, 401(k), 403(b), and 457 plan participants who turn age 50 or are age 50+ may defer additional contributions, up to this limit, from their compensation.

[4] - For plan years beginning after January 1 of the limitation year, annual compensation exceeding this limit will not be considered when allocating contributions or in compliance testing. Example: if an employee earns $300,000 in 2019, only $280,000 will be considered for plan compliance and contribution calculation purposes.

[5] - For plan years beginning after January 1 of the limitation year, anyone whose annual compensation exceeds this figure will be considered highly compensated in the following plan year. Example: if an employee earned $125,000 or more in the 2019 plan year, the employee will be highly compensated for the 2020 plan year.

[6] - This figure represents the maximum social security integration level for plan years beginning after January 1 of the limitation year. In addition, employees and employers stop paying social security taxes on compensation earned in excess of this limit. As a result, workers do not receive social security benefits for compensation earned in excess of the limit.

[7] - For plan years ending after January 1 of the limitation year, a participant's maximum annual pension benefit payable under a plan cannot exceed the lesser of this limit or 100% of annual compensation. The employer's funding obligation to pay this promised benefit is determined annually by an actuary.