IRS Announces 401(k) Contribution Limits for 2020
The IRS has announced that for the 2020 plan year, employees can contribute $19,500 in 401(k), 403(b) and most 457 plans, an increase of $500, while the combined employer and employee contribution limit rises by $1,000 to $57,000. For participants ages 50 and over, the additional “catch-up” contribution limit will increase to $6,500, up by $500.
For IRAs, the contribution limit and the catch-up contribution remains unchanged. For 2020, the IRA annual contribution continues at $6,000 and the catch-up contribution limit continues at $1,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of household, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000.The limitation used in the definition of highly compensated employees for 2020 will increase from $125,000 to $130,000.