The Internal Revenue Service (IRS) announced 2020 contribution limits for retirement plans and other related items. The most noteworthy highlights of limitations that changed from 2019 to 2020 include the following:
- The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500.
- The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.
- The limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019.
The limit on annual IRA contributions remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is unchanged for 2020 and remains $1,000.
| IRS Limits | 2020 | 2019 |
|---|---|---|
| IRAs | ||
| IRA Contribution Limit | $6,000 | $6,000 |
| IRA Catch-Up Contributions (Over age 50) | $1,000 | $1,000 |
| SEP | ||
| SEP Minimum Compensation | $600 | $600 |
| SEP Maximum Compensation | $285,000 | $280,000 |
| SEP Maximum Contribution | $57,000 | $56,000 |
| SIMPLE Plans | ||
| SIMPLE Maximum Contributions | $13,500 | $13,000 |
| SIMPLE Catch-Up Contributions | $3,000 | $3,000 |
| 401(k), 403(b), Profit Sharing Plans | ||
| Annual Compensation | $285,000 | $280,000 |
| Elective Deferrals | $19,500 | $19,000 |
| Catch-Up Contributions | $6,500 | $6,000 |
| Defined Contribution Limits | $57,000 | $56,000 |
| Other | ||
| HCE Threshold | $130,000 | $125,000 |
| Defined Benefit Limits | $230,000 | $225,000 |
| Key Employee | $185,000 | $180,000 |
| 457 Elective Deferrals | $19,500 | $19,000 |
| Social Security Taxable Wage Base | $137,700 | $132,900 |
Source: IRS Notice 2019-59