Cost-of-Living Adjustments

Cost-of-Living Adjustments

2020 Cost-of-Living Adjustments Announced

On November 6, 2019, the Internal Revenue Service issued Notice 2019-59. This document is a partial summary of the IRS Notice and is intended as a guide. Do not rely solely on this document when making financial decisions. It is recommended that you visit the IRS website and/or confer with your financial planner prior to making financial decisions.
Limit 2020 2019

Defined Benefit Plans: The lesser of the maximum dollar limitation for annual benefits under defined benefit plans under Internal Revenue Code (IRC) Section 415(b)(1)(A) or 100% of the participant's average compensation for his high 3 years.

$230,000

$225,000

Defined Contribution Plan 415 dollar limit: The lesser of the dollar limitation for annual additions under defined contribution plans under IRC Section 415(c)(1)(A) or 100% of compensation.

$57,000

$56,000

401(k)/403(b)/Existing SARSEP Elective deferral limit: All elective deferrals (including designated Roth contributions) in a tax year made by a participant to a 401(k), 403(b) tax deferred annuity, simplified employee pension, and SIMPLE retirement plan are aggregated under IRC Section 402(g).

$19,500

$19,000

457 Deferral Limits: The lesser of the limitation on vested contributions to 457 plans under IRC Section 457(e)(15) or 100% of includible compensation.

$19,500

$19,000

403(b) Catch-up limit: The maximum available 402(g) elective deferral limit plus the special catch-up election for employees participating in a 403(b) tax deferred annuity who have had at least 15 years of service with an educational organization, hospital, home health agency, health and welfare service agency, church or convention or association of churches. Note: The additional 403(b) special catch-up of up to $3,000 per year cannot exceed cumulatively $15,000 over the lifetime of the 403(b) participant.

$22,500

$22,000

457 Catch-up Limit: The special catch-up election for employees participating in an eligible 457 deferred compensation who have elected the special catch-up available in the three years prior to the year of normal retirement age.

Note: The participant in the governmental 457(b) plan may make catch-up contributions in a year equal to the greater of (a) the amount permitted under the age 50+ catch-up, or (b) the amount permitted under the 457 catch-up.

$39,000   $38,000
Age 50+ Catch-up Limits: The special catch-up available under IRC Section 414(v) for individuals at least 50 years old in 2020 and make eligible pre-tax contributions to 401(k), 403(b), and governmental 457 plans. $6,500  $6,000 
Age 50+ Catch-up Limits: The special catch-up is available for individuals who are at least 50 years old in 2020 and make eligible pre-tax contributions to a SIMPLE plan. $3,000 $3,000
Definition of Key Employee: The compensation threshold used for determining key employees under IRC Section 416(i)(1)(A)(i).  $185,000 $180,000 
Definition of Highly Compensated Employees: The compensation threshold used for determining highly compensated employees under IRC Section 414(q)(1)(B). $130,000  $125,000
Compensation Limit: The annual limit of compensation that may be taken into account for contribution purposes in accordance with IRC Section 401 (a)(17). $285,000  $280,000 
Compensation Limit: The annual limit of compensation that may be taken into account for contribution purposes, for certain grandfathered governmental plan participants, in accordance with IRC Section 401 (a)(17) $425,000   $415,000
Adjusted Gross Income Limit for Saver’s Credit: The highest adjusted gross income, based on federal income tax filing status, taken into account for eligibility for the Saver’s Credit under IRC Section 25B

$65,000 (joint), $32,500 (single), $48,750 (head of household)

 

 $64,000 (joint), $32,000 (single), $48,000 (head of household)
SIMPLE Retirement Accounts: Compensation taken into account that an employee may elect to defer under a SIMPLE retirement plan described in IRC Section 408(p)(2). $13,500  $13,000 
Compensation for SEPs: Compensation taken into account to determine eligibility for simplified employee pensions (SEPs) $600  $600 
Taxable Wage Base: (On October 10, 2019, the Social Security Administration released its cost-of-living information for 2020) Maximum amount of earnings subject to payroll $137,700 $132,900