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Projected 2021 limits?


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9 hours ago, ratherbereading said:

Carol, I always print out yours! I was about to suggest your name and realized you were the poster . . .

I update mine immediately when the IRS numbers come out.  But I always like to have the projected numbers when they are available, because the IRS has gotten later and later in releasing its numbers.  And with the pandemic, I expect it to be even later than usual this year.

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Cost of living increase this year is only around  1.18%, so most plan limits will not increase in 2021.

The only expected increases for 2021 are:

DC limit   $58,000

Compensation limit   $290,000

 

The September 2020 CPI report will be issued by DOL early  tomorrow morning, which will "finalize" my projections, but I don't expect a large enough change (up or down) in the CPI-U index to affect any other limit.

.....   Jeff

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3 minutes ago, John Feldt ERPA CPC QPA said:

The CPI-U for September is schedule to be released tomorrow morning at 8:30am. I have a copy of Tom's file from days of yore and can provide the updated figures shortly after the release based on his file.

That would be wonderful!  As usual, I'm happy to give credit (in this case, to you, your firm, and  him).  I just like to keep my site as useful as possible, and having the projected numbers helps a lot.

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1 minute ago, Jeff Hartmann said:

Cost of living increase this year is only around  1.18%, so most plan limits will not increase in 2021.

The only expected increases for 2021 are:

DC limit   $58,000

Compensation limit   $290,000

 

The September 2020 CPI report will be issued by DOL early  tomorrow morning, which will "finalize" my projections, but I don't expect a large enough change (up or down) in the CPI-U index to affect any other limit.

 

.....   Jeff

 

Thanks for that information!  The IRS always takes weeks after the CPI-U is issued, and I expect it will be even worse this year with the pandemic.

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Give credit to Tom. CPI-U for September was 260.280. Based on Tom's spreadsheet, the projections for 2021:

Increased:

Compensation Limit: $290,000 (was $285,000)

Annual Addition Limit: $58,000 (was $57,000)

Unchanged:

Deferral limit: $19,500

Catchup: $6,500

DB Limit: $230,000

Key Employee: $185,000

HCE: $130,000

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2 hours ago, rocknrolls2 said:

The Social Security Administration has just announced that the COLA for 2021 is 1.3%. From that, the IRS can calculate what, if any, limits are increased for the 2021 plan year.

Actually, IRS limits are based on CPI-U while Social Security increases are based on CPI-W.

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  • 2 weeks later...
On 10/13/2020 at 1:50 PM, XTitan said:

Actually, IRS limits are based on CPI-U while Social Security increases are based on CPI-W.

Thanks for this, it gave me an excuse to go down the rabbit hole to look at why they are different and why limits are adjusted using different indices. 

I do love some history of the Bureau of Labor Statistics with my coffee...

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  • 7 months later...

I fired up Tom's COLA spreadsheet to see where we might be headed for 2022. Using the May 2021 CPI-U, which was 269.195, based on Tom's spreadsheet, and if we have exactly 0% inflation in the CPI-U from June 1, 2021 to September 30, 2021,

Perhaps the 2022 limits might be:

Deferral limit: $20,500 (2021 is $19,500)

Compensation Limit: $300,000 (2021 is $290,000)

DC Annual Addition Limit: $60,000 (2021 is $58,000)

DB Benefit Limit: $240,000 (2021 is $230,000)

Key Employee: $195,000 (2021 is $185,000)

HCE: $135,000 (2021 is $130,000)

Unchanged:

Catchup Limit: $6,500

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  • 2 months later...

I updated Tom's COLA spreadsheet with the actual July 2021 CPI-U, which is the first of the 3 CPI-U figures needed to determine the 2022 dollar limits. The July 2021 CPI-U was 273.003. Based on Tom's spreadsheet, assuming we have exactly 0% inflation in the CPI-U from August 1, 2021 through September 30, 2021, perhaps the 2022 limits might be:

Deferral limit: $20,500 (2021 is $19,500)

Compensation Limit: $305,000 (2021 is $290,000)

DC Annual Addition Limit: $61,000 (2021 is $58,000)

DB Benefit Limit: $245,000 (2021 is $230,000)

Key Employee: $195,000 (2021 is $185,000)

HCE: $135,000 (2021 is $130,000)

Unchanged:

Catchup Limit: $6,500

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Has the comp limit ever gone up more than $5,000 in a year?

Going back to 2008 it went up $15k to 2009 from $230 to $245.  All other years since then it was $5k increases (with a few years of staying the same)

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  • 3 weeks later...

Thanks Tom. Appreciate your comment above, and very much appreciate all your comments and support over the years here providing a good mix of levity and guidance.

Hey Carol, can you change the title of this post to remove the 2021? If not, that's okay, I'll just start another fresh post when the actual CPI-U for September gets released.

The CPI-U for August was published this morning at 273.567, giving us two of the three months needed to determine the 2022 limits. (July was 273.003). September will be published on October 13.

The sum of the three CPI-U's from last year, July through September of 2020, was 779.299, for an average of about 259.766. So we're looking at about a 5.24% increase if the 2021 September CPI-U is unchanged from August at 273.567.

If that holds, the limits posted above (August 22) should be the 2022 limits. The closest one to change next is the key employee compensation threshold, which should go up to $200,000 if the CPI-U for September is 273.897 or more. Again, all based on Tom's spreadsheet.

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