There are many types of IRS approved retirement plans that could benefit employees, the self-employed and small businesses and its employees. Following is a listing of the more popular plans and the 2021 and 2022 contribution limits.
| 2021 | 2022 | |
| 401(k) and 403(b) maximum employee elective deferral | $19,500 | $20,500 |
| Defined contribution plan limit for employee and employer | $58,000 | $61,000 |
| Solo 401(k) maximum contribution for employee and employer | $58,000 | $61,000 |
| Catch-up contribution for the above plans over age 50 | $6,500 | $6,500 |
| IRA contribution limit | $6,000 | $6,000 |
| IRA catch-up contribution over age 50 | $1,000 | $1,000 |
| Roth IRA contribution limit | $6,000 | $6,000 |
| Roth IRA catch-up contribution over age 50 | $1,000 | $1,000 |
| SEP IRA maximum contribution | $58,000 | $61,000 |
| Catch-up contribution for employee | Not permitted | Not permitted |
| SIMPLE maximum contribution for employee | $13,500 | $14,000 |
| SIMPLE catch-up contribution for employee over age 50 | $3,000 | $3,000 |
| SIMPLE maximum matching contribution by employer (a) | $16,500 | $17,000 |
This is permitted with sufficient employee salary and applicable employer safe-harbor elections.
Some of these plans require employers to cover employees, so this must be considered when making a decision. There are additional plans that are also permitted and if contemplating maximizing your benefits, a retirement plan tax specialistshould be consulted, as they should when engaging in any complicated tax area.
Deadlines for Establishing Retirement Plans for 2021
| October 1, 2021 | SIMPLE (Too late for 2021) |
| December 31, 2021 | 401(k), 403(b) and Solo 401(k) |
| Original due date of individual tax return | IRA and Roth IRA accounts |
| Extended due date for individual tax return | SEP IRA |
Deadlines for Payment into Retirement Plans for a 2021 Tax Deduction
| Original due date of individual tax return | IRA and Roth IRA accounts |
| Extended due date for individual tax return or tax return claiming the deduction | SEP IRA, 401(k), 403(b), Solo 401(k), SIMPLE |
While 2021 is near an end, it is not too late to open a 401(k) or Solo 401(k). For businesses that want to establish a SIMPLE, now would be a good time to get it set up for 2022. Self-employed individuals or businesses that delay in making a decision can open a SEP IRA and make the payment as late as the earlier of their extended due date of their individual tax return for 2021 or the date the return was filed.
The above is a guide and you should obtain the advice of your tax advisor before proceeding.
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