The Internal Revenue Service (IRS) released guidance on cost-of-living adjustments affecting contributions to 401(k) plans and other retirement-related items for 2020 because the increase in the cost-of-living index met the statutory thresholds, triggering their adjustment. However, one key limit remains unchanged.
The elective deferral (contribution) limit for employees who participate in 401(k) and 403(b) plans increased from $19,000 to $19,500. Employees aged 50 and over have a “catch-up” contribution limit increased from $6,000 to $6,500.
The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000. Read More