Defined contribution plans: The contribution limit on self-directed workplace retirement plans including 401(k)s, 403(b)s, most 457 plans, and the federal government’s Thrift Savings Plan will increase by $500 in 2020, from $19,000 to $19,500, according to the IRS.
The catch-up contribution limit for employees age 50 and over in defined contribution plans will increase from $6,000 to $6,500.
Related: IRS announces 2020 HSA limits
IRA plans: Individual retirement investors will not realize an increase to the savings limit next year; the limit on IRA contributions will remain at $6,000, and the catch up contribution cap will remain at $1,000.
Total DC contributions: The limit on total contributions to a defined contribution plan, including elective employee deferrals, employer matches, and non-elective deferrals, increases $1,000, to $57,000.
Cap on SIMPLE plans: The cost of living adjustment to the cap on SIMPLE workplace plans will also increase, from $13,000 to $13,500.
Income limits: The limits on income that allow households or individuals to deduct contributions to IRAs, Roth IRAs, and to qualify for the Savers Credit also all increased:
–For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000 to $75,000, up from $64,000 to $74,000.
–For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000, up from $103,000 to $123,000.
–For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000.
–For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
Individuals and heads of households can contribute to a Roth IRA if their income is below a set threshold. The phase-out range will increase to $124,000 to $139,000, up from $122,000 to $137,000. For married couples filing jointly, the phase out range increases to $196,000 to $206,000, up from $193,000 to $203,000.
Defined benefit plan changes:
- Beginning January 1, 2020, the limit on annual benefits from defined benefit plans will increase $5,000, to $230,000.
- The annual compensation limit to determine defined benefit payments increases from $280,000 to $285,000.
- The “key employee” dollar definition in a top-heavy plan increases from $180,000 to $185,000.
- The dollar limit for defining a “highly compensated employee” increases from $125,000 to $130,000.
- The level of plan assets that determine whether a collectively bargained multi-employer plan is systemically important increases $38 million, to $1.097 billion.
AGI limits for determining savers credit:
For married couples, the adjusted gross income limitation for determining the maximum retirement savings contribution credit increases $500, to $39,000.
The 50 percent credit rate drops to 20 percent at $42,500, a $1,000 increase. The 10 percent-of-contribution credit is phased out at $65,000, also up from $1,000.