Explains IRA and Retirement Plan Limits for 2020
Many IRA and retirement plan limits are indexed for inflation each year. On November 6, 2019, the IRS (Notice 2019-59) announced the inflation-adjusted numbers for 2020.
The maximum IRA contribution for 2020 is $6,000, unchanged from 2019 (the catch-up limit for those 50 and older also remains unchanged at $1,000). However, certain phaseout ranges for determining the deductibility of traditional IRA contributions, and for determining whether an individual can contribute to a Roth IRA, have increased for 2020.
For employer-sponsored retirement plans, the elective deferral limit for 401(k), 403(b), and 457(b) plans increases to $19,500 for 2020, and the catch-up limit increases to $6,500. The maximum amount that can be contributed to a defined contribution plan for 2020 increases to $57,000, and the maximum amount of compensation that can be taken into account in determining benefits for most plans for 2020 increases to $285,000.