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    Locke Lord QuickStudy: IRS Announces 2020 Retirement Plan Limitations – Most Limits are Increased

    Locke Lord Publications

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    The Internal Revenue Service announced the 2020 cost-of-living adjustments to the dollar limitations for qualified retirement plans and other benefits, and the Social Security Administration announced its own cost-of-living adjustments for 2020.  The elective deferral contribution limit for 401(k), 403(b) and 457(b) plans will increase to $19,500 and the dollar limit for catch-up contributions (if age 50 or older) will increase to $6,500.  Other limits, such as the annual compensation limit under 401(a)(17), the limit used in the definition of key employee and the maximum annual contribution limit under Code Section 415, also will increase in 2020.

    RETIREMENT PLAN LIMITS AND SOCIAL SECURITY WAGE BASE

     

     

    2020 Limits

    2019 Limits

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

    $19,500

    $19,000

    Catch-Up Contribution (plans other than SIMPLE plans)

    $6,500

    $6,000

    SIMPLE Plan Employee Deferrals

    $13,500

    $13,000

    SIMPLE Plan Catch-Up Contributions

    $3,000

    $3,000

    Plan Maximum Annual Contribution – Defined Contribution Plans (Section 415(c))

    $57,000

    $56,000

    Maximum Annual Benefit – Defined Benefit Plans (Section 415(b))

    $230,000

    $225,000

    Compensation Limit under Section 401(a)(17)

    $285,000

    $280,000

    Highly Compensated Employee Definition under Section 414(q)

    $130,000

    $125,000

    Key Employees Officer Compensation for Top-Heavy Plans

    $185,000

    $180,000

    ESOP limit for determining the maximum account balance subject to the 5-year distribution limit

    $1,150,000

    $1,130,000

    ESOP dollar amount used for determining the lengthening of the 5-year distribution period

    $230,000

    $225,000

    Social Security (FICA) Wage Base

    $137,700

    $132,900

     

    HEALTH AND WELFARE PLAN LIMITS

     

    Health Savings Account and High Deductible Health Plan Limits

    Earlier this year, the IRS announced the inflation-adjusted amounts for health savings account and high-deductible health plans for 2020.  The HSA limit for self-only/family coverage will increase to $3,550 and $7,100, respectively for 2020. The maximum annual out-of-pocket expense limits for high deductible health plans for both self-only and family coverage and the minimum annual deductible will increase in 2020.

     

    Health Savings Accounts/HDHP Limits

     

    2020 Limits

    2019 Limits

    HSA Contribution -- Annual Contribution Limit

    Self-Only Coverage

    $3,550

    $3,500

    Family Coverage

    $7,100

    $7,000

    Catch-Up Contributions (age 55 or older)

    $1,000

    $1,000

    High Deductible Health Plan – Minimum Annual Deductible

    Self-Only Coverage

    $1,400

    $1,350

    Family Coverage

    $2,800

    $2,700

    High Deductible Health Plan – Maximum Out of Pocket Limit

    Self-Only Coverage

    $6,900

    $6,750

    Family Coverage

    $13,800

    $13,500

     

     

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