2020 IRS Limits Announced for 401(k)'s etc.

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JAZZISCOOL
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2020 IRS Limits Announced for 401(k)'s etc.

Post by JAZZISCOOL » Wed Nov 06, 2019 10:58 am

I don't believe this has been posted yet:

The contribution limit for employees who participate in 401(k), 403(b) and most 457 plans is increased from $19,000 to $19,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.

https://www.forbes.com/sites/ashleaebel ... dd5a5333bb

Rainmaker41
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IRS announces 2020 retirement plan contribution limit increases

Post by Rainmaker41 » Wed Nov 06, 2019 12:14 pm

[Topic merged here -- mod oldcomputerguy]

The IRS has announced retirement plan contribution limit increases for 2020.

401(k)/403(b)/TSP/457 plans:

Employee contribution limit is increasing from $19,000 to $19,500.
Catch-up contribution limit for persons 50 and older is increasing from $6,000 to $6,500.
[Combined employee, after-tax, and employer contributions limit] is increasing from $56,000 to $57,000.

SIMPLE plans:

Contribution limit is increasing from $13,000 to $13,500.

IRAs:

Contribution limit is unchanged at $6,000.
Catch-up contribution limit for persons 50 and older is unchanged at $1,000.

Saver's Credit:

AGI limit is increasing from $64,000 to $65,000 for MFJ; $48,000 to $48,750 for Head of Household; $32,000 to $32,500 for Single filers.

https://www.irs.gov/newsroom/401k-contr ... es-to-6500
Last edited by Rainmaker41 on Wed Nov 06, 2019 1:24 pm, edited 3 times in total.

mervinj7
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Re: IRS announces 2020 retirement plan contribution limit increases

Post by mervinj7 » Wed Nov 06, 2019 12:27 pm

It looks like tfb's calculations from August were on point. I was expecting no change in the Roth IRA limits but I'm still disappointed.

https://thefinancebuff.com/401k-403b-ir ... imits.html

megabad
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Re: IRS announces 2020 retirement plan contribution limit increases

Post by megabad » Wed Nov 06, 2019 1:16 pm

I don't see any mentioned of the total qualified plan contribution limit? Did I miss it? If not, does that mean it did not increase or that the IRS just foolishly left it out of the Notice? Does it come out in a separate employer notice?

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ObliviousInvestor
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Re: IRS announces 2020 retirement plan contribution limit increases

Post by ObliviousInvestor » Wed Nov 06, 2019 1:18 pm

megabad wrote:
Wed Nov 06, 2019 1:16 pm
I don't see any mentioned of the total qualified plan contribution limit? Did I miss it? If not, does that mean it did not increase or that the IRS just foolishly left it out of the Notice? Does it come out in a separate employer notice?
It's in there.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2020 from $56,000 to $57,000.
Mike Piper, author/blogger

megabad
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Re: IRS announces 2020 retirement plan contribution limit increases

Post by megabad » Wed Nov 06, 2019 1:20 pm

ObliviousInvestor wrote:
Wed Nov 06, 2019 1:18 pm
megabad wrote:
Wed Nov 06, 2019 1:16 pm
I don't see any mentioned of the total qualified plan contribution limit? Did I miss it? If not, does that mean it did not increase or that the IRS just foolishly left it out of the Notice? Does it come out in a separate employer notice?
It's in there.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2020 from $56,000 to $57,000.
I guess I should have clicked through the notice from the link. Thanks. Good to know.

Watts
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by Watts » Wed Nov 06, 2019 4:31 pm

Here’s a direct link to the IRS post:
https://www.irs.gov/newsroom/401k-contr ... es-to-6500

AMJoshua
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2020 Contribution Limits

Post by AMJoshua » Wed Nov 06, 2019 5:43 pm

[Topic merged here- Moderator Misenplace]

So the 2020 retirement account contribution limits have been announced.
$19,500 for 401(k) accounts. (up $500 from 2019)
$6,500 catch-up contributions for 50+ (up $500 from 2019)
$6,000 for IRA accounts (unchanged)
$1,000 catch-up contributions for 50+ (unchanged)

At least this makes the math easy for those 50+ who get paid weekly.
$19,500 + $6,500 = $26,000 ÷ 52 = $500 per week for those who can swing it.

Of course if you also have two IRAs you would like to contribute the maximum to then that brings another $12,000 to $14,000 per year to the contribution table. ($230 - $270 per week)

Looks like a nice goal to shoot for.

Happy investing 2020! :)

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neurosphere
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401k/403b/etc limits increasing

Post by neurosphere » Wed Nov 06, 2019 5:57 pm

[Topic merged here- Moderator Misenplace]

2020 updates to various retirement plan limits and other inflation-dependent values have been officially released by the IRS: https://www.irs.gov/newsroom/401k-contr ... es-to-6500
The IRS wrote: The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $19,000 to $19,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.

The limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019.
In the above link is also a link to a pdf with all the COLA/inflation-related numbers.

I'm pretty sure these most of these values were anticipated and previously calculated and are somewhere on Bogleheads, but figured it's good to provide have the official release.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

illumination
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by illumination » Wed Nov 06, 2019 6:20 pm

So how does it work that the 401k limit goes up $500, but the IRA limit remains unchanged?

Just curious the reasoning.

DonIce
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by DonIce » Wed Nov 06, 2019 6:29 pm

illumination wrote:
Wed Nov 06, 2019 6:20 pm
So how does it work that the 401k limit goes up $500, but the IRA limit remains unchanged?

Just curious the reasoning.
Same reasoning that has the IRA limit be almost 10x lower than the 401k limit to begin with?

illumination
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by illumination » Wed Nov 06, 2019 6:46 pm

DonIce wrote:
Wed Nov 06, 2019 6:29 pm
illumination wrote:
Wed Nov 06, 2019 6:20 pm
So how does it work that the 401k limit goes up $500, but the IRA limit remains unchanged?

Just curious the reasoning.
Same reasoning that has the IRA limit be almost 10x lower than the 401k limit to begin with?
But shouldn't it go up at least something?

I was just curious how they scale it.

mervinj7
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by mervinj7 » Wed Nov 06, 2019 6:52 pm

illumination wrote:
Wed Nov 06, 2019 6:46 pm
DonIce wrote:
Wed Nov 06, 2019 6:29 pm
illumination wrote:
Wed Nov 06, 2019 6:20 pm
So how does it work that the 401k limit goes up $500, but the IRA limit remains unchanged?

Just curious the reasoning.
Same reasoning that has the IRA limit be almost 10x lower than the 401k limit to begin with?
But shouldn't it go up at least something?

I was just curious how they scale it.
See: https://thefinancebuff.com/401k-403b-ir ... imits.html
Before the IRS publishes the official numbers in October, I’m able to make my own calculations using the published inflation numbers and the same rules the IRS uses as stipulated by law. Before I have the inflation numbers for all the months used in the formula, due to rounding rules I can project the contribution limit for next year with high confidence. The inflation numbers in the months to come just aren’t able to make the limits cross another rounding threshold. For example the law says a limit must be rounded down to the nearest $500. When the calculated result ends around $6,200, I know even if it’s off a little, it’s not going to go over $6,500.

emoore
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by emoore » Wed Nov 06, 2019 6:53 pm

illumination wrote:
Wed Nov 06, 2019 6:46 pm
DonIce wrote:
Wed Nov 06, 2019 6:29 pm
illumination wrote:
Wed Nov 06, 2019 6:20 pm
So how does it work that the 401k limit goes up $500, but the IRA limit remains unchanged?

Just curious the reasoning.
Same reasoning that has the IRA limit be almost 10x lower than the 401k limit to begin with?
But shouldn't it go up at least something?

I was just curious how they scale it.
It can only go up in $500 increments so it takes much longer for the small IRA limits to go up $500 when multiplied by the COLA vs. the larger 401k limits.

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neurosphere
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by neurosphere » Wed Nov 06, 2019 7:06 pm

emoore wrote:
Wed Nov 06, 2019 6:53 pm
It can only go up in $500 increments so it takes much longer for the small IRA limits to go up $500 when multiplied by the COLA vs. the larger 401k limits.
What's interesting is that, assuming we get 1 to 3% inflation consistently for several years, we'll soon get to the point where they'll be a new increased limit every year for the 401k limits. And EVENTUALLY the IRA limits will go up enough that a $500 increment threshold will be reached almost every year. But, we're not there yet. :D
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

abyan
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by abyan » Wed Nov 06, 2019 7:07 pm

I’m confused. Including the catch-up contribution, what’s the max I can put into my solo 401k for 2020, for employee and employer contributions combined? $63,000?

HomeStretch
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by HomeStretch » Wed Nov 06, 2019 7:16 pm

abyan wrote:
Wed Nov 06, 2019 7:07 pm
I’m confused. Including the catch-up contribution, what’s the max I can put into my solo 401k for 2020, for employee and employer contributions combined? $63,000?
$63,500 for age 50+? $57,000 limit + $6,500 age 50+ catchup. Assuming sufficient business net earnings.

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neurosphere
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by neurosphere » Wed Nov 06, 2019 7:19 pm

abyan wrote:
Wed Nov 06, 2019 7:07 pm
I’m confused. Including the catch-up contribution, what’s the max I can put into my solo 401k for 2020, for employee and employer contributions combined? $63,000?
irs wrote:The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2020 from $56,000 to $57,000.
Catch-up contributions can be made such that the total contribution can be as high as $57,000 + $6500 = $63,500. Or at least, that's what investopedia says.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

abyan
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by abyan » Wed Nov 06, 2019 7:40 pm

Oh ok, thanks.

MotoTrojan
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by MotoTrojan » Wed Nov 06, 2019 7:46 pm

Awesome. I was already contributing within $4/month of the new limit (missed a few at beginning of this year so had to play catch-up). Guess nothing changes there.

stocknoob4111
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Re: 2020 Contribution Limits

Post by stocknoob4111 » Wed Nov 06, 2019 8:14 pm

AMJoshua wrote:
Wed Nov 06, 2019 5:43 pm
Looks like a nice goal to shoot for.

Happy investing 2020! :)
I wish, will still be limited by the ADP means testing rules so probably will not make a difference to me.

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Johnnie
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by Johnnie » Thu Nov 07, 2019 11:09 am

This thread is poignant, because this is the first year in ages that I'm not maxing Roth and 403b contributions, as I begin a gradual
transition from accumulation to distribution. It's time to start paying those taxes, Johnnie, on both current and deferred income, with Roth conversions right up to the bottom of the next tax bracket

Sigh - a sign of getting older. :beer
And also a sign that my lifelong labors are coming to their end/reaching their fruition. :sharebeer
"I know nothing."

AMJoshua
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Re: 2020 Contribution Limits

Post by AMJoshua » Thu Nov 07, 2019 8:46 pm

stocknoob4111 wrote:
Wed Nov 06, 2019 8:14 pm
AMJoshua wrote:
Wed Nov 06, 2019 5:43 pm
Looks like a nice goal to shoot for.

Happy investing 2020! :)
I wish, will still be limited by the ADP means testing rules so probably will not make a difference to me.
I guess I should be thankful I never heard of ADP means testing and had to look it up. I lead a pretty simple life. I'll be 50 next year. I'm going to try to max out my 401(k), my Roth IRA, my HSA and my wife's traditional IRA which will come to $42,250 ($35,250 of which will be tax deferred) That'll be a good chunk (actually, most) of my salary but my wife also works (teaching) so we'll have enough to get by.

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F150HD
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by F150HD » Sat Nov 09, 2019 9:43 am

The age 50+ catchup contribution....I assume is in the year you turn 50?

Example- if you turn say 50 on November 9, 2020, you can still do the catchup contribution in all of 2020, correct? you don't need to wait until you're actually '50' to fund it.....?

I assume this is the case, but would rather ask then create a hassle w/ a tax deferred account one would have to fix.

Thanks.

(Sorry if this was answered above and I missed it.)

thankyouverymuch
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by thankyouverymuch » Sat Nov 09, 2019 10:06 am

F150HD wrote:
Sat Nov 09, 2019 9:43 am
The age 50+ catchup contribution....I assume is in the year you turn 50?
Correct: “Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions.”
Source:
https://www.irs.gov/retirement-plans/pl ... tributions

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F150HD
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by F150HD » Sat Nov 09, 2019 10:08 am

thankyouverymuch wrote:
Sat Nov 09, 2019 10:06 am
F150HD wrote:
Sat Nov 09, 2019 9:43 am
The age 50+ catchup contribution....I assume is in the year you turn 50?
Correct: “Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions.”
Source:
https://www.irs.gov/retirement-plans/pl ... tributions

:thumbsup :thumbsup :beer

an_asker
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by an_asker » Sat Nov 09, 2019 10:21 am

F150HD wrote:
Sat Nov 09, 2019 9:43 am
The age 50+ catchup contribution....I assume is in the year you turn 50?

Example- if you turn say 50 on November 9, 2020, you can still do the catchup contribution in all of 2020, correct? you don't need to wait until you're actually '50' to fund it.....?

I assume this is the case, but would rather ask then create a hassle w/ a tax deferred account one would have to fix.

Thanks.

(Sorry if this was answered above and I missed it.)
Yes. [No to second question]

Tiffku08
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Re: 2020 IRS Limits Announced for 401(k)'s etc.

Post by Tiffku08 » Mon Nov 11, 2019 7:07 pm

Thanks for the update! :happy

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