The Internal Revenue Service announced that employees in 401(k) plans will be able to contribute up to $19,500 in 2020. In addition, dollar limitations for pension plans and other retirement-related items for tax year 2020 were announced.
Highlights of changes for 2020
- The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan 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 increased to $13,500, up from $13,000 for 2019.
- The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2020.
Key limit remains unchanged
The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
Details on these and other retirement-related cost-of-living adjustments for 2020 are in Notice 2019-59 (PDF), available on IRS.gov.
If you are interested in offering your employees a way to start saving for retirement, there are a number of different plans you can offer. To discuss your options, visit https://www.cpsgo.com/retirement/ or speak with a retirement specialist at 770-446-7289 x 7115.
Actify Investor Retirements, LLC dba CorPay Retirement Services. Investment advisory services provided by Actify Investor Retirements, LLC. Actify Investor Retirements, LLC is a Registered Investment Advisor. Information presented is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.