The IRS has released the 2020 contribution limits! Since not everyone was awaiting them quite as eagerly as we were, here is a quick summary.
The good news is that both the 401(k) deferral limit and overall contribution/benefit limits increased, as did the maximum compensation limit.
Here's a rundown of the 2020 limits:
Compensation and Benefit Limits
- Annual compensation limit
- Increases from $280,000 to $285,000
- Salary deferral limit for 401(k) and 403(b) plans
- Increases from $19,0000 to $19,500
- Salary deferral limit for SIMPLE IRA
- Increases from $13,000 to $13,500
- Salary deferral limit for 457 plans
- Increases from $19,000 to $19,500
- Catch-up contribution limit for 401(k) plans
- Increases from $6,000 to $6,500
- Catch-up contribution limit for SIMPLE IRAs
- Remains unchanged at $3,000
- Annual additions limit for defined contribution plans
- Increases from $56,000 to $57,000
- Annual additions limit for defined benefit plans
- Increases from $225,000 to $230,000
- Social Security Wage Base
- Increases from $132,900 to $137,700
Testing Limits
- Highly compensated employee
- Increases from $125,000 to $130,000
- Key employee based on officer status
- Increases from $180,000 to $185,000
- Key employee based on 1% owner compensation
- Remains unchanged at $150,000
You can find a chart of these limits from 2011 to 2020 here in the DWC Knowledge Center.