2021 401(k) Contribution Limit
For 2021, the 401(k) Contribution Limit is $19,500 (Elective deferral) and +$6,500 (Age 50 catch-up).
Effective 2021-01-01Source: Notice 2020-79 (IRS)Verified 2026-08-29
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)
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.