Clark Associates Financial Planning, Inc

JOHN P. CLARK, CFP®
146 Lakeview Drive South
Suite #301
Gibbsboro, NJ 08026
609-567-1884
fax 609-567-2028
john.clark@clarkassociates.net
www.clarkassociates.net
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December 17, 2019
 

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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