JD, LLM, Managing Director - National Tax Services
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IRS releases 2020 COLA-based limits for retirement plans, IRAs
The IRS has released its 2020 cost-of-living-adjusted limitation amounts for tax-qualified retirement plans and IRAs. Read on for a summary of the most important changes.
- Defined benefit plan annual accrual limit – increased from $225,000 to $230,000.
- Defined contribution plan annual addition limit – increased from $56,000 to $57,000.
- Elective deferrals annual limit – increased from $19,000 to $19,500.
- Annual compensation limit – increased from $280,000 to $285,000.
- Compensation threshold for top-heavy plan “key employee” status – increased from $180,000 to $185,000.
- Compensation threshold for “highly compensated employee” status – increased from $125,000 to $130,000.
- Dollar limit for catch-up contributions for individuals aged 50 or over – increased from $6,000 to $6,500.
- Contribution limit for SIMPLE retirement accounts – increased from $13,000 to $13,500.
- Annual maximum deductible amount for traditional IRA contributions – remains unchanged at $6,000.
- Dollar amount for determining deductible amount of traditional IRA contributions for active participants in an employer retirement plan filing a joint return or as a qualifying widow(er) – increased from $103,000 to $104,000.
- Dollar amount for determining deductible amount of a traditional IRA contribution for all others who are active participants in an employer retirement plan (other than married taxpayers filing separate returns) – increased from $64,000 to $65,000.
- Adjusted gross income limit for determining deductible amount of a traditional IRA contribution if not an active participant in an employer retirement plan but spouse is an active participant – increased from $193,000 to $196,000.
- Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions for single individuals and heads of household who are active participants in an employer retirement plan – increased from $64,000-$74,000 to $65,000-$75,000.
- Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions for married couples filing jointly where the spouse who makes the traditional IRA contribution is an active participant in an employer retirement plan – increased from $103,000-$123,000 to $104,000-$124,000.
- Adjusted gross income phase-out range for determining deductible amount for traditional IRA contributions by an individual who is not an active participant in an employer retirement plan but whose spouse is an active participant – increased from $193,000-$203,000 to $196,000-$206,000.
- Adjusted gross income limit for determining maximum Roth IRA contributions if married and filing jointly or if filing as a qualifying widow(er) – increased from $193,000 to $196,000.
- Adjusted gross income limit for determining maximum Roth IRA contributions for all others (other than married taxpayers filing separate returns) – increased from $122,000 to $124,000.
- Adjusted gross income phase-out range for contributions to a Roth IRA for married couples filing jointly – increased from $193,000-$203,000 to $196,000-$206,000.
- Adjusted gross income phase-out range for contributions to a Roth IRA for singles and heads of household – increased from $122,000-$137,000 to $124,000-$139,000.
Dana Fried, Managing Director, National Tax
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