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IRS Announces 2020 Pension Plan Limitations

The IRS has announced cost-of-living adjustments for 2020 retirement plan contributions. For 2020, the amounts that individuals will be able to contribute to 401(k), 403(b), and 457(b) retirement plans will increase $500 to $19,500. The catch-up contribution limit for employees age 50 and over will also increase $500 to $6,500. 

This chart summarizes the limitations for 2020 (amounts that changed for 2020 are shown in bold):

Contribution Limits    2019

   2020

Elective Deferral Limit – 401(k), 403(b) and 457(b) Plans                   $19,000         $19,500           
Catch-Up Contribution Limit $6,000 $6,500
Elective Deferral Limit – SIMPLE Retirement Plan $13,000 $13,500
Catch-Up Contribution Limit – SIMPLE Retirement Plan $3,000 $3,000
Contribution Limit – IRA $6,000 $6,000
Catch-Up Contribution Limit – IRA $1,000 $1,000

Benefits and Compensation
Defined Contribution Plan Addition Limit $56,000 $57,000
Defined Benefit Plan Annual Benefit Limit $225,000 $230,000
Annual Compensation Limit $280,000 $285,000
Highly Compensated Employee Limit $125,000 $130,000
Key Employee Compensation Limit $180,000 $185,000

The Social Security Administration earlier announced that the Social Security Wage Base for 2020 will increase to $137,700 from $132,900.

If you have questions about the new pension plan limitations, please contact Brent Gambill (937-449-5539) or Edie Crump (937-449-5530).

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