It’s that time of the year again! The Internal Revenue Service (IRS) has announced retirement plan contribution limits for 2020. The 401(k) and 403(b) employee deferral limit is increased to $19,500 from $19,000. Employees aged 50 and older can contribute an additional $6,500, up from $6,000.
“Just about any increase in contribution limit is good news. It allows individuals to save more toward a meaningful retirement,” says Mizan J. Rahman, CEO and founder of Nesa Plan Consultants.
Here’s a reference chart for some of the major limits:
| 2020 | 2019 |
Contribution & Compensation Limit | ||
Employee Salary Deferrals | $19,500 | $19,000 |
Employee Catch-Up | $6,500 | $6,000 |
Maximum Individual Limit (under 50) | $57,000 | $56,000 |
Maximum Individual Limit (over 50) | $63,500 | $62,000 |
Annual Compensation Limit | $285,000 | $280,000 |
Compliance Testing Limits | ||
Highly-Compensated Employee | $130,000 | $125,000 |
Key Employee (Officer) | $185,000 | $180,000 |
Have questions? Need assistance with notifying your employees of new contribution limits? Feel free to reach out to us at mrahman@nesa401k.com or 818-275-1556.
