Year End Communications About Retirement Savings


The IRS has announced that the elective deferral limit for employee contributions to 401(k) plans for 2021 will remain at $19,500. However, it’s still an important time of year for plan sponsors to communicate with employees.

Updates from the IRS

Although there are no changes to employee contributions, the IRS has announced a $1,000 increase to maximum contributions from all sources (employer and employee combined), bringing that total to $58,000 for 2021.

The contribution maximum limit for those age 50 and older, including “the catch-up,” also rises by $1,000 to a total of $64,500 in 2021.

These adjustments were made by the Secretary of the Treasury, which is required to annually review dollar limitations for benefits and contributions based on the cost of living. Plan sponsors can stay up to date by reviewing the complete IRS Notice.

Share Information and Encouragement

Though the employee contribution limit remains unchanged for 2021, human resource professionals advise that it is best practice to make a special point of communicating about retirement savings with employees as the year ends. Ongoing communication is especially important this year, given all the uncertainties weighing on employees.

The Society for Human Resource Management suggests encouraging employees to set the annual limit as their contribution goal and offers this advice:

  • Not all plan participants will be able to fund their 401(k) accounts up to the maximum, of course, but the contribution cap is a goal they should keep in mind and may encourage those who can defer extra dollars for retirement savings to do so.

  • With the annual increase in the employee contribution limit, a good message for plan participants is that “increasing your contribution rate, even by 1 percent, can make a big difference in your long-term retirement savings,” said Kevin Barry, president of workplace investing at Fidelity. “What may seem like a small amount today can have a significant impact on your account balance in 10 or 20 years.”


  • Those who have not been contributing enough per paycheck to reach the annual cap and who can afford to do so can increase their contributions before the end of the year so that they reach the full annual limit.

Build Confidence: Protect Hard Earned Savings

Raise employee confidence when you communicate about retirement savings by informing them your company’s retirement plan is protected by an ERISA fidelity bond, as required by the government. Before you do that though, take a few minutes to ensure your plan’s ERISA bond is up to date and properly covers the plan.

Remember, only companies named on the Department of Treasury’s listing of approved sureties are able to provide ERISA fidelity bonds. As an ERISA fidelity bond expert, Colonial Surety Company can help you comply with regulations and further protect your plan—and yourself, as a plan fiduciary.

When you choose an ERISA bond package from Colonial, you receive a discount on ERISA bond coverage for your plan; Fiduciary Liability coverage for yourself as the plan sponsor; and, the option to add on Cyber Liability coverage. Save time, money and stress: Get a Colonial Surety ERISA Bond Package.

Good to Know

Importantly, Colonial’s affordable ERISA bond packages include extended coverage to ensure your ERISA bond remains US Department of Labor complaint. When you choose your package, don’t forget to include Fiduciary Liability insurance to protect yourself from covered acts as the plan sponsor.

Colonial Surety Company is a direct to consumer, digital insurance provider, serving all 50 states and U.S. Territories. Colonial’s I-Bonds® are available for an instant quote, purchase, print or e-file on your desktop or mobile device. Choose your ERISA Bond Package Today!