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January / February 2020

Key Retirement and Tax Numbers for 2020

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2020.

Employer retirement plans

  • Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,500 in compensation in 2020 (up from $19,000 in 2019); employees age 50 and older can defer up to an additional $6,500 in 2020 (up from $6,000 in 2019).
  • Employees participating in a SIMPLE retirement plan can defer up to $13,500 in 2020 (up from $13,000 in 2019), and employees age 50 and older can defer up to an additional $3,000 in 2020 (the same as in 2019).

IRAs

The combined annual limit on contributions to traditional and Roth IRAs is $6,000 in 2020 (the same as in 2019), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA phases out for the following modified adjusted gross income (MAGI) ranges:

2019 2020
Single/head of household (HOH) $64,000 - $74,000 $65,000 - $75,000
Married filing jointly (MFJ) $103,000 - $123,000 $104,000 - $124,000
Married filing separately (MFS) $0 - $10,000 $0 - $10,000

Note:  The 2020 phaseout range is $196,000 - $206,000 (up from $193,000 - $203,000 in 2019) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.

The modified adjusted gross income phaseout ranges for individuals to make contributions to a Roth IRA are:

2019 2020
Single/HOH $122,000 - $137,000 $124,000 - $139,000
MFJ $193,000 - $203,000 $196,000 - $206,000
MFS $0 - $10,000 $0 - $10,000

Estate and gift tax

  • The annual gift tax exclusion for 2020 is $15,000, the same as in 2019.
  • The gift and estate tax basic exclusion amount for 2020 is $11,580,000, up from $11,400,000 in 2019.

Standard deduction

2019 2020
Single $12,200 $12,400
HOH $18,350 $18,650
MFJ $24,400 $24,800
MFS $12,200 $12,400

Note:  The additional standard deduction amount for the blind or aged (age 65 or older) in 2020 is $1,650 (the same as in 2019) for single/HOH or $1,300 (the same as in 2019) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.

Alternative minimum tax (AMT)

2019 2020
Maximum AMT exemption amount
Single/HOH $71,700 $72,900
MFJ $111,700 $113,400
MFS $55,850 $56,700
Exemption phaseout threshold
Single/HOH $510,300 $518,400
MFJ $1,020,600 $1,036,800
MFS $510,300 $518,400
26% rate on AMTI* up to this amount, 28% rate on AMTI above this amount
MFS $97,400 $98,950
All others $194,800 $197,900
*Alternative minimum taxable income

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