2021 TWB Announced; Retirement Plan Limits to Follow
October 13, 2020 – The Social Security Administration has announced the 2021 adjustments for benefits and certain other limitations that are subject to annual cost-of-living adjustment (COLA) indices. One of these includes the Social Security taxable wage base (TWB), which identifies the maximum amount of an individual’s annual earnings that are subject to withholding for Social Security-administered benefits. The TWB is sometimes also used in retirement plan contribution allocations that use so-called “integrated” formulas, providing additional retirement plan benefits on income above the TWB, income for which the recipient will not receive Social Security benefits. For 2021, the TWB will rise from $137,700 to $142,800.
Significantly, it has been common for the IRS to provide the COLA-determined retirement limitations for the coming year shortly after the revised TWB is announced by the Social Security Administration.