The IRS and Social Security Administration have announced the 2020 cost-of-living adjustments for retirement plans.
Here are some of the more significant limitations affecting employee benefit plans:
- The maximum amount that may be deferred under 401(k), 403(b) and 457(b) plans, not including catch-up deferrals, under Internal Revenue Code Section 402(g) limit, is increased from $19,000 to $19,500.
- The IRC Section 415 maximum annual benefit under a defined benefit plan will be increased by $5,000 to $230,000.
- The IRC Section 415 maximum annual additions under a defined contribution plan will be increased by $1,000 to $57,000, subject to the overall limitation of 100 percent of compensation.
- The highly compensated employee threshold dollar limit increased by $5,000 to $130,000.
- The maximum amount of compensation that may be taken into account for benefit purposes under a qualified plan will be increased from the current limit of $280,000 to $285,000.
- The catch-up deferrals to 401(k), 403(b) and 457 plans will be increased by $500 to $6,500. Please note that the catch-up deferrals are only available for plan participants who turn 50 at any time during the plan year and who may no longer make deferrals because of plan or regulatory limitations.
- The Social Security taxable wage base is increased by $4,800 to $137,700.
If you have questions about any of these adjustments, please contact me or anyone in the Barley Snyder Employee Benefits Group.