By Audit & Assurance
On November 6, 2019, the IRS announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2020 tax year. Changes to the limits are based on the Social Security cost-of-living increases. Below are the new 2020 plan limitations:
| 2020 | 2019 | |
| 401(k), 403(b) and 457(b) deferral limits | $19,500 | $19,000 |
| 401(k) and 403(b) catch-up deferral limits | $6,500 | $6,000 |
| Annual limitation on compensation | $285,000 | $280,000 |
| Defined contribution limitation | $57,000 | $56,000 |
| Defined benefit limitation | $230,000 | $225,000 |
| Highly compensated employee compensation threshold | $130,000 | $125,000 |
| Key employee compensation – officer threshold | $185,000 | $180,000 |
| SIMPLE deduction | $13,500 | $13,000 |
| SIMPLE catch-up contribution | $3,000 | $3,000 |
| IRA contribution limit | $6,000 | $6,000 |
| IRA catch-up contribution limit | $1,000 | $1,000 |
| Social Security wage base | $137,700 | $132,900 |