Save time with our cheat sheets, fact sheets, checklists & books!

March 26, 2021

Compensation Cap

Your Guide

Share on print
Share on facebook
Share on twitter
Share on pinterest
Share on linkedin


The compensation cap is the maximum amount of compensation that may be taken into consideration when determining contributions  to employer sponsored retirement plans,  such as SEP IRAs, SIMPLE IRAs, 403(b) arrangements, qualified plans-such as 401(k)-profit sharing and pension plans..

Referring Cite

IRC § 401(a)(17), IRC § 404(l)

Additional Helpful Information

The compensation cap does not apply to SIMPLE IRA matching contributions.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Share on print

Keep Learning

Excess deferral

Definition Salary deferral contributions, contributions are limited to the lesser of the IRC § 402(g) limit or 100% of compensation. Salary deferral contributions in excess

Catch-up Contribution

Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the

Be among the first to know when

IRA Rules