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