The IRS announced this week changes in retirement plan contribution limits for 2020.
The limit on elective deferral contributions to Sec. 401(k) plans, Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan will increase from $19,000 in 2019 to $19,500 in 2020. The catch-up contribution limit for those 50 and older will increase to $6,500 from $6,000 in 2019 (Notice 2019-59). Most other inflation-adjusted amounts related to pensions will increase from 2019 to 2020.
Here’s what you need to know:
- The maximum deductible individual retirement arrangement (IRA) contribution for 2020 will stay the same at $6,000.
- The ability of taxpayers who are covered by workplace retirement plans to make a deductible IRA contribution will phase out for singles and heads of household who have adjusted gross incomes (AGIs) between $65,000 and $75,000.
- For married couples filing jointly, where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phaseout range will be $104,000 to $124,000 for 2020.
- When an IRA contributor is not covered by a workplace retirement plan but is married to someone who is, the deduction will be phased out if the couple’s income is between $196,000 and $206,000.
- For taxpayers making contributions to Roth IRAs, the phaseout range for determining the maximum contribution will be $196,000 to $206,000 for married couples filing jointly and $124,000 to $139,000 for singles and heads of household.
- The AGI limit for the saver’s credit will be $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for single taxpayers and for married individuals filing separately.
Most amounts are increases from 2019.
