By Pension and Benefits Editorial Staff
The IRS has released the 2020 cost-of-living adjustments to retirement plan limits. Most of the pension plan limitations will change for 2020. For example, the limitation on the annual benefit under a defined benefit plan under Code Sec. 415(b)(1)(A) increases from $225,000 to $230,000 for 2020, while the limitation for defined contribution plans under Code Sec. 415(c)(1)(A) increases for 2020 from $56,000 to $57,000. The Code Sec. 402(g)(1) limitation on the exclusion for elective deferrals increases from $19,000 to $19,500.
The limitation used in the definition of “highly compensated employee” under Code Sec. 414(q)(1)(B) is increased from $125,000 to $130,000 for 2020.
The annual compensation limit increases from $280,000 to $285,000. The dollar limitation concerning the definition of “key employee” in a top-heavy plan is increased from $180,000 to $185,000.
The dollar limitation under Code Sec. 414(v)(2)(B)(i) for catch-up contributions to a 401(k) plan for individuals aged 50 or over is increased from $6,000 to $6,500 for 2020.
IRAs. The limit on annual contributions to an IRA remains unchanged at $6,000 for 2020.
The income ranges for determining eligibility to make deductible contributions to traditional IRAs and to contribute to Roth IRAs will increase for 2020. The phase-out ranges for IRAs for 2020, for single taxpayers covered by a workplace retirement plan, will be $65,000 to $75,000, up from $64,000 to $74,000. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range will be $104,000 to $124,000, up from $103,000 to $123,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000.
The income phase-out range for taxpayers making contributions to a Roth IRA will be $124,000 to $139,000 for singles and heads of household, up from $122,000 to $137,000, for 2020. For married couples filing jointly, the income phase-out range is $196,000 to $206,000, up from $193,000 to $203,000.
Source: IRS Notice 2019-59.
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