The IRS has announced the new retirement plan limits for 2020. Most limits increased from 2019 to 2020, and some stayed flat. Highlights include:
- The compensation limit used in determining benefits and contributions for both defined benefit and defined contribution plans increased from $280,000 to $285,000.
- For defined benefit plans, the maximum annual benefit for a participant with at least ten years of participation and a normal retirement age between 62 and 65 increased from $225,000 to $230,000.
- For defined contribution plans (profit sharing and 401(k) plans), the maximum annual contribution for a participant increased from $56,000 to $57,000. While this limit includes salary deferrals, it does not include catch up contributions.
- The limit on salary deferrals for 401(k) plans increased from $19,000 to $19,500. The limit on catch up contributions for 401(k) plans, which are available to participants who attain age 50 by the end of 2020, increased from $6,000 to $6,500.
As 2020 approaches, so does the deadline to set up a qualified plan for the 2019 calendar tax year. If you are interested in setting up a qualified plan, please contact us.
You can find a printable version of the complete list of the new 2020 annual limits by visiting the Retirement Plan Limits page of our website.
