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Retirement Planning Key Numbers
Certain retirement plan and IRA limits
are indexed for inflation each year, but only some of the limits eligible for a
cost-of-living adjustment (COLA) have increased for 2020. Some of the
key numbers for 2020 are listed below, with the corresponding limit for 2019.
(The source for these 2020 numbers is IRS Notice 2019-59.)
| Elective deferral limits
|
2019 |
2020 |
| 401(k) plans, 403(b) plans, 457(b) plans, and
SAR-SEPs1 (includes Roth contributions) |
Lesser of $19,000 or 100% of participant's
compensation ($25,000 if age 50 or older)2 |
Lesser of $19,500 or 100% of participant's
compensation
($26,000 if age 50 or older)2 |
| SIMPLE 401(k) plans and SIMPLE IRA plans1 |
Lesser of $13,000 or 100% of participant's
compensation ($16,000 if age 50 or older)
|
Lesser of $13,500 or 100% of participant's
compensation ($16,500 if age 50 or older) |
| IRA contribution limits |
2019 |
2020 |
| Traditional and Roth IRAs
|
Lesser of $6,000 or 100% of earned income ($7,000 if age 50 or older)
|
Lesser of $6,000 or 100% of earned income ($7,000 if age 50 or older) |
| Defined benefit plan annual benefit limits |
2019 |
2020 |
| Annual benefit limit per participant
|
Lesser of $225,000 or 100% of average compensation for
highest three consecutive years
|
Lesser of $230,000 or 100% of average compensation for
highest three consecutive years
|
| Defined contribution plan limits (qualified plans,
403(b) plans, and SEP plans) |
2019 |
2020 |
| Annual addition limit per participant (employer
contributions; employee pre-tax, after-tax, and Roth contributions; and
forfeitures)
|
Lesser of $56,000 or 100% (25% for SEP) of
participant's compensation
|
Lesser of $57,000 or 100% (25% for SEP) of
participant's compensation
|
1 Must aggregate employee deferrals to all 401(k),
403(b), SAR-SEP, and SIMPLE plans of all employers; 457(b) contributions
are not aggregated. For SAR-SEPs, the percentage limit is 25% of compensation
reduced by elective deferrals (effectively a 20% maximum contribution).
2 Special catch-up limits may also apply to 403(b)
and 457(b) plan participants.
|
Retirement plan compensation limits |
2019 |
2020 |
| Maximum compensation per participant that can be used
to calculate tax-deductible employer contribution (qualified plans/SEPs)
|
$280,000
|
$285,000
|
|
Compensation threshold used to determine a highly
compensated employee
|
$125,000 (when 2019 is the look-back year)
|
$130,000 (when 2020 is the look-back year)
|
|
Compensation threshold used to determine a key
employee in a top-heavy plan
|
$1 for more-than-5% owners
$180,000 for officers
$150,000 for more-than-1% owners
|
$1 for more-than-5% owners
$185,000 for officers
$150,000 for more-than-1% owners
|
|
Compensation threshold used to determine a qualifying
employee under a SIMPLE plan
|
$5,000
|
$5,000
|
|
Compensation threshold used to determine a qualifying
employee under a SEP plan
|
$600
|
$600
|
| Income phaseout range for determining deductibility of
traditional IRA contributions for taxpayers:
|
2019 |
2020 |
|
1. Covered by an employer-sponsored plan and filing as:
|
|
|
|
Single/Head of household
|
$64,000 - $74,000
|
$65,000 - $75,000
|
|
Married filing jointly
|
$103,000 - $123,000
|
$104,000 - $124,000
|
|
Married filing separately
|
$0 - $10,000
|
$0 - $10,000
|
|
2. Not covered by an employer-sponsored retirement
plan, but filing joint return with a spouse who is covered by a plan
|
$193,000 - $203,000
|
$196,000 - $206,000
|
|
Income phaseout range for determining ability to fund
a Roth IRA for taxpayers filing as: |
2019 |
2020 |
|
|
|
Single/Head of household
|
$122,000 - $137,000
|
$124,000 - $139,000
|
|
Married filing jointly
|
$193,000 - $203,000
|
$196,000 - $206,000
|
|
Married filing separately
|
$0 - $10,000
|
$0 - $10,000
|
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