Form 5500 Filings: Steps to Avoid Costly Penalties
Nov 14, 2019
Cost-of-Living Adjustments Announced by the IRS
Nov 12, 2019
On November 6, 2019, the Internal Revenue Service (IRS) announced its cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items.
These adjustments will take effect on January 1, 2020. Highlights include an increase in the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan.
The chart below outlines all limitation adjustments for 2020:
| 2020 | 2019 | |
| 401(k), 403(b), Profit-Sharing Plans, etc. | ||
| Annual Compensation | $285,000 | $280,000 |
| Elective Deferrals | 19,500 | 19,000 |
| Defined Contribution Limits | 57,000 | 56,000 |
| Catch-up Contributions | 6,500 | 6,000 |
| IRAs | ||
| IRA Contribution Limit | $6,000 | $6,000 |
| IRA Catch-Up Contributions | 1,000 | 1,000 |
| SIMPLE Plans | ||
| SIMPLE Maximum Contributions | $13,500 | $13,000 |
| Catch-up Contributions | 3,000 | 3,000 |
| SEP | ||
| SEP Maximum Compensation | $285,000 | $280,000 |
| SEP Maximum Contribution | 57,000 | 56,000 |
| SEP Minimum Compensation | 600 | 600 |
| ESOP | ||
| Account Balance | $1,150,000 | $1,130,000 |
| 5-year Distribution Factor | 230,000 | 225,000 |
| Other Limits | ||
| HCE Threshold | $130,000 | $125,000 |
| Defined Benefit Limits | 230,000 | 225,000 |
| Key Employee | 185,000 | 180,000 |
| 457 Elective Deferrals | 19,500 | 19,000 |
Limits that remain unchanged:
The annual contribution limit to an IRA remains at $6,000 and the associated catch-up contribution limit for individuals aged 50 and over, remains at $1,000.
For questions or to further discuss how the cost-of-living adjustments may impact you, contact a member of Withum’s Employee Benefits Services Group by filling out the form below.
Author: Dominique Walsh, CPA, Employee Benefit Plan Services Group | dwalsh@withum.com
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