April 1, 2021

Annual Addition Limit

Your Guide

Definition

The annual Addition limit is the maximum amount that may be added to a defined contribution plan on behalf of a participant for any plan year. The maximum amount is the lesser of the following: (a). 100% of the participants compensation for the year or  ( b). The dollar limit that is in effect for the year

The dollar limits for are as follows:

Year

Limit

2008

$46,000

2009

$49,000

2010

$49,000

2011

$49,000

2012

$50,000

2013

$51,000

2014

$52,000

2015

$53,000

2016

$53,000

2017

$54,000

2018

$55,000

2019

$56,000

2020

$57,000

2021$58,000

Referring Cite

IRC § 415(b)(1)(A) and IRC § 415(c)(1)(A), Treas Reg §1.415(c)-1

Additional Helpful Information

  • The term annual additions generally means the sum for any year of employer contributions, employee contributions, and forfeitures.
  • For plans that include salary deferral features, individuals who are at least age 50 by the end of the year may make catch-up contributions in addition to the annual addition limit, if catch-up contributions are permitted under the plan.

Written By

Retirement Dictionary Staff

Frequently Asked Questions Regarding

72(t) payments – also referred to as Substantially Equal Periodic Payments (SEPP) can be taken from IRAs, qualified plans-including 401(k) plans, and 403(b) accounts. However, while 72(t) payments can be taken from IRAs at any time, they can be taken from qualified plans and 403(b) accounts only after the participant has separated from service with the employer that sponsored the plan. Therefore, if you are still employed by the company that sponsored your 401(k) plan, you cannot take 72(t) payments from that account.  But, if you are no longer employed by that company, then you may be able to take 72(t) payments from the account.

Please contact our office to help you determine if a 72(t) payment program is suitable for you.

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