Projected 2020 IRS Contribution LimitsSubmitted by Karstens Investments on October 31st, 2019
by Mark E. Johnson, AIFA ®
As of this writing, the IRS has not announced cost of living increases for dollar limits for retirement savings accounts. Mercer estimated that for employees participating in a 401(k), 403(b), 457 or a federal government Thrift Savings plan, the annual elective contribution maximum should increase to $19,500 for 2020. The catch-up contribution limit for individuals that will attain 50 years or older in 2020 should also increase by $500 to $6,500. The annual additions limitation for all employer and employee contributions made on an employee’s behalf during the calendar year is expected to increase to $57,000 for 2020. The maximum compensation amount allowed to be considered for benefit purposes is also expected to increase to $285,000. Lastly, the contribution maximum for SIMPLE plans should increase to $13,500 and the catch-up contribution limit of $3,000 will remain unchanged.
The dollar limits for contributions to IRAs are also expected to remain unchanged at $6,000 and $1,000 for IRA catch-up contributions. A few of the income limitations applicable to phase-out provisions for IRAs and Roth IRAs are expected to increase slightly from 2019 levels.
Health Savings Account (HSA) limits increased slightly for the 2020 plan year. For an individual, the annual contribution limit increased by $50 to $3,550 and for family coverage the annual contribution increased by $100 to $7,100. HSAs are available to employees that participate in their employer-sponsored high-deductible health plan (HDHP). These accounts are tax-advantaged and are used to pay qualified medical expenses not covered by the HDHP. You should consult your advisor for information regarding your specific situation when planning for the new year.