IRS Adjusts 2020 Retirement Contribution Limits

It’s not just another new year but a new decade! Typically, each year as we move into a new calendar year the IRS adjusts contribution limits to retirement plans to account for inflation. This year is no different, and here are some of the more notable changes for 2020:

401(k)/403(b)

Contribution limits increased for the new year to $19,500, up $500 from the $19,000 max in 2019. If you are age 50 or older you also are allowed a “catch up” contribution which increased this year for the first time in quite some while as well. The “catch-up” contribution is up to $6,500 for 2020 to encourage additional savings.

IRA’s/Roth IRA’s

Unfortunately, the IRS did not make any changes to the contribution limits for IRA’s or Roth IRA’s in 2020. This remains the same at $6,000 for the year with an additional $1,000 “catch-up” contribution available to those 50 and older. Please keep in mind IRA’s and Roth IRA’s have income considerations as well so review this before making contributions.

HSA’s

HSA savings limits have increased just slightly for 2020. Family maximum contributions are up $100 from 2019 to a total of $7,100 and individuals increased by $50 to a level of $3,550 for 2020.

SEP

Business owner’s and self-employed individuals are able to save a bit more in 2020 as well. The maximum contribution to a SEP IRA increased to $57,000 in 2020, up from $56,000 in 2019. This maximum is subject to a percentage of income calculation as well.

SIMPLE

Those employees with a SIMPLE IRA plan have a new maximum available as well. The SIMPLE contribution maximum bumped up to $13,500 in 2020 up slightly from $13,000 in 2019. SIMPLE IRA participants over 50 are also eligible for an additional $3,000 “catch-up” contribution.

There are some slight differences in 2020 for retirement contribution limits so be sure to adjust your savings to take advantage. Hopefully 2020 is your best year yet and will set the tone for a great decade.

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