Retirement Account Contributions

The IRS announced that contribution limits on 401(k)s and other qualified retirement accounts will be increasing slightly in 2020.  The new deferral limit for individuals under the age of 50 is $19,500, which is an increase of $500 from 2019.  The catch-up for individuals over age 50 will be $6,500 ($6,000 / 2019).  The total contribution limit (employee and employer contributions) is increasing by $1,000 to $57,000 in 2020 ($56,000 / 2019)

IRA and Roth IRA contribution limits will remain unchanged ($6,000 for individuals under 50 and $7,000 for individuals over 50).  However, income limitations on contributions will chang.  For joint filers with an adjusted gross income (AGI) under $124,000 can receive a deduction for IRA contributions ($75,000 for a single filer).  Deductions phase out for joint filers starting at an AGI of $104,000 and an AGI of $65,000 for single filers.  There is no income limitation on making an IRA contribution.  Roth IRA income limitations on making contributions will increase to $196,000 for joint filers (up from $193,000 / 2019) and completely phases out at $206,000 ($124,000 to $139,000 for single filers).

Simple IRA contribution limits also will increase from $13,000 in 2019 to $13,500 in 2020.

Full details on all changes can be found on the IRS website: https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500