403(b) Contribution Limits 2021

403(b) contribution limit isn’t surprising in 2021. How much a working individual can contribute to his or her 403(b) retirement account is the same as its cousin retirement plan in 2021, 401(k). The IRS announces the contribution limits for both the 401(k) and 403(b). Although these two plans have their own differences, there isn’t much difference beneath the surface.

The only difference between a 401(k) and 403(b) including the contribution limits is who provides these retirement plans. While 401(k) plans are offered to employees who are working at a for-profit organization, 403(b) plans are offered to employees of nonprofits, tax-exempt organizations, certain public schools, and ministers.

403(b) Contribution Limts 2021

AgeContribution Limit
Under 65$20,000
65 and Older$26,500

The contribution limits are the same but 401(k) retirement accounts generally give more options regarding investments. If a certain investment option is offered only to 401(k) and it suits you the best, it might be a reason to choose 401(k) instead of 403(b). That’s of course assuming you’re eligible for both.

Even though 401(k) gives more investment options, there isn’t a significant difference. It all comes down to which you can be eligible for. Anyone can have both 403(b) and 401(k) but it may result in salary reduction contributions. This will ultimately lower the contributions. Because of this, it is best to choose one over the other.

As for which one to choose, since the contribution limits are the same and contribution limits may apply—pick 401(k) if the majority of your income is coming from a for-profit. If not, choose 403(b). With that said, it all comes down to your earnings rather than which one is going to benefit you the most. Considering there isn’t much difference between the two in investment options, either one is okay.

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