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:
- Social security taxes
- Unemployment Insurance
- 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:
- Medical insurance
- Flexible spending accounts
- Paid leaves
- Retirement Saving plans
- Tuition reimbursement
- 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 Plans||2021 limit||2020 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|
|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.