2021 401(k) Contribution Limit
For 2021, the 401(k) Contribution Limit figures are $19,500 (Elective deferral) and +$6,500 (Age 50 catch-up).
Effective 2021-01-01Source: Notice 2020-79 (IRS)Verified 2026-09-02
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Elective deferral | $19,500 | $19,500 | +$0 (+0.0%) |
| Age 50 catch-up | +$6,500 | +$6,500 | +$0 (+0.0%) |
Who it applies to
Employees who participate in a qualified employer retirement plan subject to Internal Revenue Code Section 402(g)
What changed this year, and why
The IRS announced the 2021 cost-of-living adjustments for retirement plan contribution limits under Section 415(d) of the Internal Revenue Code.
Common questions
- What is the elective deferral limit for 2021?
- Effective January 1, 2021, the limit on elective deferrals to a qualified employer retirement plan is $19,500.
- Can workers age 50 or older contribute more?
- Yes. Employees who are at least 50 years old by the end of 2021 may make an additional catch-up contribution of $6,500.
- Did the limits change from 2020?
- No. Both the $19,500 elective deferral limit and the $6,500 catch-up contribution limit remained unchanged from 2020.
What the limit counts, and the tax it does not save
An elective deferral is the amount you choose to have your employer contribute to a retirement plan instead of paying it to you directly. The key tax benefit is that elective deferrals (except designated Roth contributions) are excluded from your wages subject to federal income tax at the time they are made. This means you do not pay income tax on that money until you withdraw it from the plan. However, elective deferrals are still subject to social security and Medicare taxes. This is an important distinction: the deferral reduces your income tax for the year of contribution, but it does not reduce payroll taxes. Elective deferrals apply across various employer-sponsored retirement plans. Your total deferrals across all such plans are combined and subject to the overall annual limit. For 2021, the overall elective deferral limit is $19,500, and if you are age 50 or older, you may also make catch-up contributions of an additional $6,500.
An elective deferral, other than a designated Roth contribution (dis- cussed later), isn't included in wages subject to income tax at the time contributed. However, it’s included in wages subject to social security and Medicare taxes.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
One limit across every plan you defer into
The IRS sets one overall limit on elective deferrals that applies across all qualified retirement plans you participate in. For 2021, the total amount you can defer across all plans is $19,500. This is not a separate limit for each individual plan - it is a combined aggregate limit. Even if you work for multiple employers or participate in several different types of retirement plans during the year, your total elective deferrals cannot exceed this overall limit. Your employer or plan administrator will apply the proper annual limit when calculating your plan contributions, but the responsibility ultimately falls on you to monitor the total amount you defer to ensure it does not exceed the overall limit. If you are age 50 or older by the end of the year, you may also make catch-up contributions of an additional $6,500 beyond the basic limit.
Overall limit on deferrals. For 2021, you shouldn't have deferred more than a total of $19,500 of contributions to the plans listed in (1) through (3), earlier, unless you are 50 or older.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
The catch-up once you are old enough for it
If you are age 50 or older by the end of your tax year, you may be eligible to make catch-up contributions, which are additional elective deferrals beyond the basic annual limit. For 2021, the catch-up limit for section 401(k) plans, section 403(b) plans, the Thrift Savings Plan, SARSEP plans, and governmental section 457 plans is $6,500. This means that if you are 50 or older, you can defer up to an additional $6,500 on top of the regular elective deferral limit. For SIMPLE plans specifically, the catch-up limit is lower. The catch-up provision is designed to help older workers who may not have had the opportunity to save as much for retirement earlier in their careers. Your plan must allow catch-up contributions for you to take advantage of this provision, and you should coordinate with your plan administrator to ensure your elections are properly processed.
Catch-up contributions. You may be allowed catch-up contributions (additional elective de- ferrals) if you're age 50 or older by the end of your tax year.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
What happens if you defer more than the limit
If your elective deferrals exceed the annual limit, you must take corrective action. First, you must notify your plan by the date required by the plan. If the plan permits, the excess amount will be distributed to you. If you participate in more than one plan, you can have the excess paid out of any plan that permits these distributions, but you must notify each plan of the amount to be paid from that particular plan. The plan must pay you the excess amount along with any income earned on that amount by April 15 of the following year. You must include the excess deferral in your income for the year of the deferral, even if you do not take it out. If you fail to remove the excess, you will be taxed twice on the amount left in the plan: once when you contributed it and again when you eventually receive it as a distribution. Any income earned on the excess deferral is taxable in the year you withdraw it.
Excess deferrals. If your deferrals exceed the limit, you must notify your plan by the date re- quired by the plan.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
Roth deferrals count against the same limit
Designated Roth contributions are a type of elective deferral that you can make to a section 401(k) plan, section 403(b) plan, or governmental section 457 plan if the plan offers a qualified Roth contribution program. These contributions are treated as elective deferrals for purposes of the annual limit, but unlike traditional elective deferrals, designated Roth contributions are included in your gross income in the year they are made. This means you pay income tax on the money before it goes into the plan rather than when you withdraw it. However, qualified distributions from a designated Roth account are not included in income, which can provide significant tax benefits if your investments grow substantially over time. Because designated Roth contributions count as elective deferrals, they are subject to the same annual limit as traditional pre-tax deferrals. For 2021, the combined total of your pre-tax and designated Roth deferrals cannot exceed $19,500 (plus the $6,500 catch-up amount if you are age 50 or older).
Designated Roth contributions. These contributions are elective deferrals but are in- cluded in your wages in box 1 of Form W-2.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
The window to pull out an excess deferral closes April 15
If you defer more than $19,500 into your 401(k) in 2021, the excess is an excess deferral. If you are age 50 or older, you may add the $6,500 catch-up on top of the regular limit. Your plan must distribute the excess, plus any income it earned, to you by April 15 of the year after the deferral was made. You must also report the excess as income on your federal return for the year you made the deferral. The deadline matters: if the plan pays you before April 15, you avoid being taxed on the excess a second time when you eventually receive it as a distribution. If you do not take the excess out by that date, the rules treat it as still inside the plan and tax it again later, so meeting the April 15 deadline is the way to resolve the double taxation.
The plan must then pay you the amount of the ex- cess, along with any income earned on that amount, by April 15 of the following year.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
There is no form to file - your employer reports it on your W-2
You do not file a separate form with the IRS to report your 401(k) elective deferrals. Instead, your employer handles the reporting. The employer should not include your elective deferrals in your wages shown in box 1 of Form W-2. Instead, the employer marks the "Retirement plan" checkbox in box 13 and shows the total amount you deferred in box 12 of your W-2. This means the deferral appears on your W-2, not on a form you prepare yourself, and your tax return relies on what the employer reports. The 2021 elective deferral limit is $19,500, with an additional $6,500 catch-up available for participants age 50 or older. Your W-2 in box 12 should reflect whichever amount applies to you for the year.
Your employer gen- erally shouldn't include elective deferrals in your wages in box 1 of Form W-2. Instead, your em- ployer should mark the Retirement plan check- box in box 13 and show the total amount defer- red in box 12.
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
Leave the excess in the plan and it is taxed twice
If you defer more than the 2021 limit of $19,500 into your 401(k) (with the $6,500 catch-up available on top for those age 50 or older) and leave the excess inside the plan instead of having it distributed, the IRS taxes the excess twice. First, you must include the excess in your income for the year you made the deferral, so it is taxed once at contribution. Then, when you eventually receive that same money as a distribution from the plan, it is taxed again. The only exception is if the excess was a designated Roth contribution, which is already after-tax money. To avoid the double tax, the excess should be distributed out of the plan by April 15 of the following year, rather than left in the plan to be taxed a second time later.
Excess not distributed. If you don't take out the excess amount, you can't include it in the cost of the contract even though you inclu- ded it in your income. Therefore, you're taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution (unless the excess deferral was a designated Roth contri- bution).
Publication 525 (2021), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2020-79 (IRS)
- Elective deferral
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $19,500.
- Age 50 catch-up
The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or § 408(p) for individuals aged 50 or over remains unchanged at $6,500.