Understanding Employee Benefits

Annual Limits on Qualified Plans for 2020

By | November 6, 2019

On November 6, 2019, the Internal Revenue Service (IRS) released Notice 2019-59, which sets forth the 2020 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans. The IRS also announced the health savings account (HSA) and high deductible health plan (HDHP) annual deductible and out-of-pocket expense adjustments earlier this year in Revenue Procedure 2019-25. The Social Security Administration announced its cost-of-living adjustments for 2020 in October 2019, which includes a change to the taxable wage base.

The following chart summarizes the 2020 limits for benefit plans. The 2019 limits are provided for reference.

  2019 2020
Elective Deferral Limit 401(k), 403(b), 457(b) $19,000 $19,500
Catch-up Limit (age 50+) $6,000 $6,500
Defined Benefit Limit $225,000 $230,000
Defined Contribution Limit $56,000 $57,000
Dollar Limit – Highly Compensated Employees $125,000 $130,000
Officer – Key Employee $180,000 $185,000
Annual Compensation Limit $280,000 $285,000
SEP Eligibility Compensation Limit $600 $600
SIMPLE Deferral Limit $13,000 $13,500
SIMPLE Catch-up Limit (age 50+) $3,000 $3,000
Social Security Taxable Wage Base $132,900 $137,700
ESOP 5 Year Distribution Extension Account Minimum $1,130,000 $1,150,000
Additional Amount for 1-Year Extension $225,000 $230,000
HSA (Self/Family) Maximum Annual Contribution $3,500/$7,000 $3,550/$7,100
HDHP Minimum Deductible Limits $1,350/$2,700 $1,400/$2,800
Out-of-pocket Expense Annual Maximum $6,750/$13,500 $6,900/$13,800
Medical FSA $2,700 *

*Waiting for final 2020 number from IRS but expected to be $2,750

For more information on the 2020 cost-of-living adjustments, please contact Lisa Rippey, Jeff Cairns or the Stinson LLP contact with whom you regularly work.

Contact Lisa Rippey for more information.