November 19, 2019

November 18, 2019

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IRS Announces 2020 Dollar Limits for Employee Benefit Plans

The IRS has announced the dollar limits for contributions and benefits in retirement plans and certain deferred compensation plans for 2020. We have compiled a chart summarizing the key limits below, including how they compare with those in the previous year. Plan sponsors should confirm with their recordkeepers that all systems have been updated to reflect the 2020 limits.

PLAN CONTRIBUTIONS/BENEFITS

2020 LIMIT 2019 LIMIT
401(k), 403(b) and 457(b) elective deferrals $19,500 $19,000
Catch-up contribution limit $6,500 $6,000
Defined benefit plan annual benefit limit $230,000 $225,000
Defined contribution plan annual addition limit $57,000 $56,000
Annual compensation limit $285,000 $280,000
Top-heavy "key employee" officer dollar limit $185,000 $180,000
Highly compensated employee (HCE) definition $130,000 $125,000
SIMPLE retirement accounts limit $13,500 $13,000
ESOP maximum balance for five-year payout $1,150,000 $1,130,000
Account over maximum balance for lengthening five-year ESOP payout period  $230,000 $225,000

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About this Author

Joan M. Neri, Counsel, Drinker Biddle, Employee Benefits, Executive Compensation
Counsel

Her practice focuses on all aspects of employee benefits counseling.  Joan represents plan service providers (including registered investment advisers, third party administrators, and recordkeepers) in fulfilling their obligations under ERISA.  Joan also represents plan sponsor clients on the design of qualified retirement plans (including ESOPs), nonqualified executive compensation plans and welfare benefit plans, day-to-day plan administrative issues and transactional planning involving benefit plan acquisitions, plan mergers and plan terminations.  Joan has represented major publicly-...

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