Benefit Plan Contribution Limits for 2021

by James Antonio

Benefit plans are offered by the employer to the employees for their welfare as well as for retaining them. Some of the benefits are required and some are offered additionally by the employers. Some of the required benefits by federal or state laws are as follows:

  1. Social security taxes
  2. Unemployment Insurance
  3. Disability insurance

Other common benefits that are not required by the federal or state laws but provided by the employers for the welfare of their employees are as follows:

  1. Medical insurance
  2. Flexible spending accounts
  3. Paid leaves
  4. Retirement Saving plans
  5. Tuition reimbursement
  6. Transportation and parking

Limits for Benefit Plan Contribution for 2020-2021

Some of the key benefit plans contribution limit for 2020 and 2021 are mentioned in the below table:

Benefit Plans2021 limit2020 limit
Elective deferral limit for 401(k), 403(b), and 457 plans$19,500$19,500
Catch-up contribution limit for 401(k), 403(b), and 457 plans*$6,500$6,500
Defined contribution plan annual additions limit$58,000$57,000
Defined benefit plan limit on annual benefit$230,000$230,000
Retirement plan annual compensation limit$290,000$285,000
Compensation for definition of highly compensated employee$130,000$130,000
Compensation for definition of key employee$185,000$185,000
SEP compensation threshold for participation$650$600
SEP contribution limit$58,000$57,000
SIMPLE retirement account pre-tax contribution limit$13,500$13,500
SIMPLE retirement account catch-up contribution limit$3,000$3,000
Health FSA limit (cafeteria plans)$2,750$2,750
Health FSA carryover limit$550$550
HSA contribution limit – family coverage$7,200$7,100
Single coverage$3,600$3,550
Social Security taxable wage base$142,800$137,700

How to Set up a Retirement Plan Deduction and Company Contribution?

Here you can follow the mention steps to set up a Retirement Plan Deduction and Company Contribution.

Total Time: 20 minutes

Step 1: Click Gear icon and go Payroll Settings

At first, click on the Gear icon (settings) and then click on Payroll settings.

Step 2: Click on Deductions or contributions

Now click on Deductions or contributions under the Payroll section.

Step 3: Add Deduction/ contribution in Select Retirement Plans

After that click and add a new Deduction/ contribution and in the category, select Retirement Plans. In type select the specific applicable retirement plan.

Step 4. Select the Provider Name

In this last step, select the name of the provider and click on OK.

Frequently Asked Questions

We have also included some frequently asked questions and answers relating to benefit plan contribution limits for your reference purposes. You can refer to these in case you come across some additional queries.

What is the Maximum Contribution limit for Roth and traditional IRA in 2021?

The combined annual contribution limit for Roth and traditional IRA in 2021 is $6,000. It is $7,000 if you are 50 years of age or older.

Can I offer 4O1K to my Employees through QuickBooks?

Yes, business owners can offer their employees 401K through QuickBooks insurance and 401 K. Business owners can protect their businesses with comprehensive insurance coverage.

How can I Recognize the 401(K) on the Balance sheet?

The 401 (K) is categorized in the Balance sheet as a current liability since it is due to be paid within a year.

How can you Change Company-paid Contributions in the QuickBooks?

Click on Payroll > Employees > edit and employee > now click on Edit against the company paid contribution you wish to change under the ‘Does this employee have any deduction’ section. Now you can edit the percentage, annual maximum value as required and click on OK.

Features of Dancing Numbers for QuickBooks Desktop

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Customization

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Dancing Numbers supports all QuickBooks entities that are mentioned below:-

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Receive Payment
Estimate
Credit Memo/Return Receipt
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Item Receipt
Vendor Credit

Banking Transactions

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Journal Entry
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Transfer Funds
Bank Statement
Credit Card Statement
Credit Card Charge
Credit Card Credit

Employee Transaction / List

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Employee Payroll
Wage Items

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Frequently Asked Questions

 
How and What all can I Export in Dancing Numbers?

You need to click "Start" to Export data From QuickBooks Desktop using Dancing Numbers, and In the export process, you need to select the type you want to export, like lists, transactions, etc. After that, apply the filters, select the fields, and then do the export.

You can export a Chart of Accounts, Customers, Items, and all the available transactions from QuickBooks Desktop.


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To use the service, you have to open both the software QuickBooks and Dancing Numbers on your system. To import the data, you have to update the Dancing Numbers file and then map the fields and import it.


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In the Delete process, select the file, lists, or transactions you want to delete, then apply the filters on the file and then click on the Delete option.


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First of all, Click the Import (Start) available on the Home Screen. For selecting the file, click on "select your file," Alternatively, you can also click "Browse file" to browse and choose the desired file. You can also click on the "View sample file" to go to the Dancing Numbers sample file. Then, set up the mapping of the file column related to QuickBooks fields. To review your file data on the preview screen, just click on "next," which shows your file data.


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How can I Import Price Level List into QuickBooks Desktop through Dancing Numbers?

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Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


Is it possible to use the Direct Connect option to sync bank transactions and other such details between Bank of America and QuickBooks?

Yes, absolutely. You can use the Direct Connect Option by enrolling for the Direct Connect service which will allow you access to the small business online banking option at bankofamerica.com. This feature allows you to share bills, payments, information, and much more.


Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


What are the various kinds of accounts you could access in QuickBooks?

QuickBooks allows you to access almost all types of accounts, including but not limited to savings account, checking account, credit card accounts, and money market accounts.

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