The 2020 employee contribution limit for Section 401(k), 403(b), and most 457 plans is to rise to $19,500 from $19,000, the IRS said Nov. 6.
The catch-up contribution limit for 2020 is to be $6,500, up from $6,000 in 2019, the agency said in Notice 2019-59 and a news release. This limit applies to employees 50 and older who participate in the plans.
Here are other limits that are to increase in 2020:
- Elective contributions limit per employee to a savings-incentive match plan for employees, also known as a SIMPLE plan, that is structured as an individual retirement account: $13,500, up from $13,000.
- Maximum annual addition under Internal Revenue Code Section 415(c)(1)(A) for defined-contribution plans: $57,000, up from $56,000
- Compensation limit used in defining a highly compensated employee: $130,000, up from $125,000.
- Annual compensation limit for qualified plans: $285,000, up from $280,000.
- Dollar limit of a key employee in a top-heavy plan: $185,000, up from $180,000.
- Compensation limit of a control employee for fringe-benefit valuation purposes: $115,000, up from $110,000.
The compensation amount under I.R.C. Section 408(k)(2)(C) pertaining to simplified employee pensions, also known as SEPs, is to remain $600 for 2020, the IRS said.
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