IRS Announces 2020 Retirement Plan and Other Benefit Limitations
November 8, 2019
The Internal Revenue Service recently announced the dollar limitations for retirement plans and other benefits, beginning January 1, 2020. Some of the limits are listed below.
| LIMITATION |
2019 AMOUNT | 2020 AMOUNT |
| Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan |
$280,000 | $285,000 |
| Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans1 |
$19,000 | $19,500 |
| Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans |
$6,000 | $6,500 |
| Limitation on Annual Additions to a Defined Contribution Plan2 |
$56,000 | $57,000 |
| Limitation on Annual Benefits from a Defined Benefit Plan3 |
$225,000 | $230,000 |
| Highly Compensated Employee Compensation Threshold4 |
$125,000 | $130,000 |
| SEP Compensation Threshold |
$600 | $600 |
| Social Security Taxable Wage Base for Social Security Tax (6.2%) | $132,900 | $137,700 |
| For Medicare Tax (1.45% / 2.35%) |
No Limit | No Limit |
| Health Savings Accounts: • Individual Contribution Limit • Family Contribution Limit • Catch-Up Contributions |
$3,500 $7,000 $1,000 |
$3,550 $7,100 $1,000 |
| Health Flexible Spending Accounts5 | $2,700 | $2,750 |
If you have any questions about this memorandum, please contact any member of our Employee Benefits and Executive Compensation Practice Group listed below.
|
Albany: (518) 533-3000 Buffalo: (716) 566-2800 Long Island: (516) 267-6300 New York City: (646) 253-2300 |
Rochester: (585) 362-4700 Syracuse: (315) 218-8000 |
Click here to visit Bond’s Employee Benefits and Executive Compensation Practice web page.
1 This limit and the catch-up limit also apply to Roth (after-tax) contributions under 401(k) and 403(b) plans that permit such contributions.
2 In no event may annual additions exceed 100% of a participant’s compensation.
3 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s high three years.
4 Generally, an employee is considered “highly compensated” if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.
5 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.
