2020 Plan Limits – IRS Announces Increases on Benefits and Contributions Dollar Limitations

Posted by Saaib T. Uppal, CPA, QKA

The IRS has announced cost-of-living adjustments that should be noted for retirement planning purposes.

Below is a chart that outlines employee benefit plan limits for 2020:

PLAN LIMITS

RETIREMENT & SOCIAL SECURITY

2020
Limit

2019
Limit

2018
Limit

Section 401(k), 403(b), 457(b) elective deferrals  $19,500  $19,000  $18,500
401(k) or 403(b) catch up contributions  6,500  6,000  6,000
Section 415 – Defined contribution plan maximum annual contributions without catch up  57,000  56,000  55,000
Section 415 – Defined benefit plan maximum annual benefit  230,000  225,000  220,000
Section 414(q)(1)(B) – Highly compensated employee – minimum compensation (applies to look back years in indicated year)  130,000  125,000  120,000
Section 416 – Key employee definition – officer compensation  185,000  180,000  175,000
Section 416 – Key employee definition – 1% owner compensation  150,000  150,000  150,000
Section 401(a)(17) – Maximum includible annual compensation  285,000  280,000  275,000
IRA or Roth IRA annual contribution limit  6,000  6,000  5,500
IRA or Roth IRA annual catch up contributions  1,000  1,000  1,000
SIMPLE Salary Deferral Limit  13,500  13,000  12,500
SIMPLE Catch-up Limit  3,000  3,000  3,000

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Plan administrators should ensure they pass along this new information to their participants so they have all the required information when planning their deferrals for 2020.

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