The New Limits for 2020

Our General Recommendations:

  1. Let your employees know the new 2020 401(k) and 403(b) deferral limits so they may decide whether to increase their payroll deductions accordingly.
  2. For Owners, consider increasing Compensation to $285,000 in order to increase their share of the Employer contribution. Please let us know if we can help you with this determination.
  3. For Defined Contribution plans (e.g. 401(k)/profit sharing plans): Consider options for maximizing the sum of Employee deferrals and Employer contributions, if desired. Please let us know if we can help you with these options.
  4. If you’re interested in exploring options to obtain tax-deductible benefits beyond the Defined Contribution plan limits, please discuss further with us. See greater limits below for Defined Benefit/Cash Balance plans.

Limits for the Year

2020

2019

401(k) and 403(b) deferral contributions
     Under age 50 $19,500 $19,000
     Age 50 or older $26,000 $25,000
Defined Contribution plan limits for sum of Employee deferrals + Employer contributions:
     Under age 50 $57,000 $56,000
     Age 50 or older $63,500 $62,000
Defined Benefit/Cash Balance plan limits:
     Annual contributions ages 50-60 (approx.) $160,000 to $265,000
     Maximum balance at age 62 (approx.) $2.9 million
     Annual annuity payout at retirement $230,000 $225,000
Maximum Compensation considered $285,000 $280,000
Highly Compensated Employee $130,000 $125,000
Key Employee (for Top Heavy testing):
     Officer $185,000 $180,000
     >1% Owner $150,000 $150,000
SIMPLE IRA deferral contributions:
     Under age 50 $13,500 $13,000
     Age 50 or older $16,500 $16,000
Social Security Tax Wage Base $137,700 $132,900

Click Here to Download “The New Limits for 2020”

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