2020 Adjustments for Qualified Retirement Plans

The Internal Revenue Service (IRS) and the Social Security Administration (SSA) have each announced 2020 cost-of-living adjustments. The IRS adjustments increased annual compensation amounts and limits for elective deferrals as well as catch-up contribution limits for age 50+ employees, but other catch-up contribution limits remain unchanged. Those receiving Social Security and Supplemental Security Income benefits will receive a 1.6 percent increase in benefits effective January 2020. The SSA also announced an increase in the taxable wage base (that is, the maximum amount of earnings subject to Social Security tax) for 2020. The table below highlights selected IRS cost-of-living adjustments amounts for 2020 and prior years as well as the SSA taxable wage base amounts for similar periods.

Code Section

2020

2019

2018

2017

2016

401(a)(17)/404(l) Annual Compensation

$285,000

$280,000

$275,000

$270,000

$265,000

402(g)(1) Elective Deferrals

19,500

19,000

18,500

18,000

18,000

408(k)(2)(C) SEP Minimum Compensation

600

600

600

600

600

408(k)(3)(C) SEP Maximum Compensation

285,000

280,000

275,000

270,000

265,000

408(p)(2)(E) SIMPLE Maximum Contributions

13,500

13,000

12,500

12,500

12,500

409(o)(1)(C)(ii) ESOP Limits

1,150,000

230,000

1,130,000

225,000

1,105,000

220,000

1,080,000

215,000

1,070,000

210,000

414(q)(1)(B) HCE Threshold

130,000

125,000

120,000

120,000

120,000

414(v)(2)(B)(i) Catch-up Contributions

6,500

6,000

6,000

6,000

6,000

414(v)(2)(B)(ii) Catch-up Contributions

3,000

3,000

3,000

3,000

3,000

415(b)(1)(A) DB Limits

230,000

225,000

220,000

215,000

210,000

415(c)(1)(A) DC Limits

57,000

56,000

55,000

54,000

53,000

416(i)(1)(A)(i) Key Employee

185,000

180,000

175,000

175,000

170,000

457(e)(15) Deferral Limits

19,500

19,000

18,500

18,000

18,000

1.61-21(f)(5)(i) Control Employee

115,000

110,000

110,000

105,000

105,000

1.61-21(f)(5)(iii) Control Employee

230,000

225,000

220,000

215,000

215,000

219(b)(5)(A) IRA Contribution Limit

6,000

6,000

5,500

5,500

5,500

219(b)(5)(B) IRA Catch-Up Contributions

1,000

1,000

1,000

1,000

1,000

Taxable Wage Base for Social Security

137,700

132,900

128,700

127,200

118,500

For more information, visit https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500.

 

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