The Internal Revenue Service recently announced the dollar limitations for retirement plans and other benefits, beginning January 1, 2020. Some of the limits are listed below.
| LIMITATION |
2019 AMOUNT | 2020 AMOUNT |
| Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan |
$280,000 | $285,000 |
| Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans1 |
$19,000 | $19,500 |
| Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans |
$6,000 | $6,500 |
| Limitation on Annual Additions to a Defined Contribution Plan2 |
$56,000 | $57,000 |
| Limitation on Annual Benefits from a Defined Benefit Plan3 |
$225,000 | $230,000 |
| Highly Compensated Employee Compensation Threshold4 |
$125,000 | $130,000 |
| SEP Compensation Threshold |
$600 | $600 |
| Social Security Taxable Wage Base for Social Security Tax (6.2%) | $132,900 | $137,700 |
| For Medicare Tax (1.45% / 2.35%) |
No Limit | No Limit |
| Health Savings Accounts: • Individual Contribution Limit • Family Contribution Limit • Catch-Up Contributions |
$3,500 $7,000 $1,000 |
$3,550 $7,100 $1,000 |
| Health Flexible Spending Accounts5 | $2,700 | $2,750 |
If you have any questions about this memorandum, please contact any member of our Employee Benefits and Executive Compensation Practice Group listed below.
|
Albany: (518) 533-3000 Buffalo: (716) 566-2800 Long Island: (516) 267-6300 New York City: (646) 253-2300 |
Rochester: (585) 362-4700 Syracuse: (315) 218-8000 |
Click here to visit Bond’s Employee Benefits and Executive Compensation Practice web page.
1 This limit and the catch-up limit also apply to Roth (after-tax) contributions under 401(k) and 403(b) plans that permit such contributions.
2 In no event may annual additions exceed 100% of a participant’s compensation.
3 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s high three years.
4 Generally, an employee is considered “highly compensated” if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.
5 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.