2020 Cost of Living Adjustments Announced

The 2020 dollar limits are as follows:

Limit 2019 2020
Defined Contribution Plan 415 Dollar Limit
The dollar limitation for annual additions under defined contribution plans under IRC Section 415(c)(1)(A). EGTRRA amended this limitation on annual additions, which is the lesser of $40,000 (as adjusted for inflation) or 100% of compensation.
$56,000 $57,000
401(k) Elective Deferral Limit
The limitation on cumulative elective deferrals to a 401(k) and 403(b) tax deferred annuity, as coordinated under IRC Section 402(g)(1).
 $19,000 $19,500
Age 50+ Catch-up Limits
The special catch-up available for individuals at least 50 years old during the year and make eligible pre-tax contributions to 401(k), 403(b), and governmental 457 plans.
 $6,000 $6,500
Definition of Key Employee
The compensation threshold used for determining key employees under IRS Section 416(i)(1)(A)(i).
$180,000 $185,000
Definition of Highly Compensated Employees
The compensation threshold used for determining highly compensated employees under IRC Section 414(q)(1)(B).
$125,000 $130,000
Compensation Limit
The annual limit of compensation that may be taken into account for contribution purposes in accordance with IRC Section 401(a)(17) (nongovernmental plan sponsors).
$280,000 $285,000
Taxable Wage Base
Maximum amount of earnings subject to payroll tax.
 $132,900 $137,700

This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice.  The services of an appropriate professional should be sought regarding your individual situation.

Shayna Osborne, ERPA, APA, APR, QPA
Osborne & Associates, Inc.

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