2021 Cost-of-Living Adjustments for Qualified Retirement Plans

October 2020

The government’s annual cost-of-living adjustments (COLA) for 2021 have been announced by the Internal Revenue Service (IRS) and the Social Security Administration (SSA). The COVID-19 pandemic’s continuing impact on the U.S. economy contributed to relatively flat changes in the 2021 COLA amounts as U.S. economic deflation during the first half of 2020 impacted the COLA metrics. The IRS increased the IRS annual compensation amounts, but limits for elective deferrals and catch-up contribution limits for age 50+ employees remained largely unchanged. The SSA’s 1.3 percent increase in benefits is one of the smallest increases historically for Social Security and Supplemental Security Income beneficiaries. View the alert for key IRS COLA amounts and the SSA taxable wage base amounts.