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At a Glance
The Internal Revenue Service increases its qualified and certain non-qualified retirement plan limits for tax year 2020.
Effective January 1, 2020, plan participants will be able to contribute up to $19,500.
The dollar limit for catch-up contributions for plan participants aged 50 and over is increased to $6,500.
Additional information can be found in Notice 2019-59 on IRS.gov .
Retirement Plan Limits for 2020
In Notice 2019-59 , the IRS released the dollar limitations for qualified retirement and certain non-qualified plans that become effective January 1, 2020. The dollar limitations adjusted by reference to IRC §415(d) are modified annually for inflation and consequently, most of them are changed for 2020.
Of particular note, the 2020 pretax limit that applies to elective deferrals to 401(k), 403(b) and most 457(b) plans is increased to $19,500, up from $19,000 in 2019. The dollar limitation for catch-up contributions for participants age 50 or over is increased to $6,500. Participants in qualified retirement plans will need to consider the impact of the 2020 dollar limitations in their overall financial planning.
A summary comparison of the cost-of-living adjustments applicable to dollar limitations for qualified retirement plans and other items for 2020 are provided in the chart below:
Qualified Retirement Plan Limitations (2019 vs. 2020)
Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.
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