IRS Announces 2020 Dollar Limitations for Retirement Plans

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The IRS has announced the 2020 annual dollar limitations for retirement plans based on the applicable cost-of-living adjustment guidelines. The annual limit for elective deferrals to 401(k) and 403(b) plans will increase from $19,000 to $19,500 and the annual limit for catch-up contributions for individuals age 50 or over will increase from $6,000 to $6,500. The Social Security Administration also recently announced that the Social Security wage base will increase from $132,900 for 2019 to $137,700 for 2020.

Listed below are the principal limits applicable for 2020 and 2019.

Limit 2020 2019

Compensation Limit

$285,000

$280,000

Elective Deferrals (401(k), 403(b), 457(b))

$19,500

$19,000

Catch-up Contributions

$6,500

$6,000

Defined Contribution Plan 415 Limit

$57,000

$56,000

Defined Benefit Plan 415 Limit

$230,000

$225,000

Highly Compensated Employee

$130,000

$125,000

Social Security Wage Base

$137,700

$132,900

SIMPLE Plan Limit

$13,500

$13,000

SIMPLE Catch-up Contributions

$3,000

$3,000

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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