February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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IRS Releases 2020 Benefit Plan Limits and Thresholds

The Internal Revenue Service (IRS) recently announced cost-of-living adjustments that affect limitations on qualified retirement plans and health plans. The increases take effect on January 1, 2020, and generally affect contribution limits, deferral limits, and income ranges and limitations.

Employee contribution limits (elective deferrals) for 401(k), 403(b), and most 457 plans will increase, along with the catch-up contribution limits for employees age 50 and over. The annual benefit limit for defined benefit plans and the contribution limit for defined contribution plans will increase slightly.

Limits on contributions to health Flexible Spending Arrangements (FSAs) also increased. The IRS increased the 2020 contribution limits for Health Savings Accounts (HSAs) and minimum deductibles and maximum out-of-pocket amounts for High Deductible Health Plans (HDHPs) in May 2019.

A summary of the notable increases is below. Note that a few limitations, including Individual Retirement Account (IRA) annual contributions and IRA catch-up contributions, will remain unchanged in 2020.

Retirement Plan Limits



401(k), 403(b), 457 Elective Deferral Limit



Catch-Up Contribution Limit (age 50 plus)



Defined Benefit Limit



Defined Contribution Limit



Annual Compensation Limit



Definition of Highly Compensated Employee



Key Employee



IRA Contribution Limit



IRA Catch-Up Contribution Limit (age 50 plus)




Health Plan Limits



Health FSA Contribution Limit



HSA Contribution Limit (Individual)



HSA Contribution Limit (Family)



HSA Catch-Up Contribution Limit (age 55 plus)



HDHP Minimum Deductible (Individual)



HDHP Minimum Deductible (Family)



HDHP Maximum Out-Of-Pocket Amount (Individual)



HDHP Maximum Out-Of-Pocket Amount (Family)



© 2023 Jones Walker LLPNational Law Review, Volume IX, Number 319

About this Author

Tim Brechtel Employee Benefits Attorney Jones Walker

Tim Brechtel began his career with the national accounting firm PricewaterhouseCoopers. His current practice focuses on assisting employers with establishing, administering, merging, and terminating qualified retirement plans, such as 401(k) plans and employee stock ownership plans (ESOPs), as well as nonqualified deferred compensation arrangements under Code Section 409A, health plans, cafeteria plans, severance plans, separation agreements, health savings accounts, flexible spending accounts, transportation, and other fringe benefit plans. His retirement plan...

Michael C. Seibert Tax Attorney Jones Walker Law Firm

Michael practices across a broad range of tax matters including employee benefits, estate planning, nonprofit formation and compliance, and federal and state and local tax compliance.