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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

2019

2020

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

$19,000

$19,500

Catch-Up Contribution Limit (age 50 plus)

$6,000

$6,500

Defined Benefit Limit

$225,000

$230,000

Defined Contribution Limit

$56,000

$57,000

Annual Compensation Limit

$280,000

$285,000

Definition of Highly Compensated Employee

$125,000

$130,000

Key Employee

$180,000

$185,000

IRA Contribution Limit

$6,000

$6,000

IRA Catch-Up Contribution Limit (age 50 plus)

$1,000

$1,000

 

Health Plan Limits

2019

2020

Health FSA Contribution Limit

$2,700

$2,750

HSA Contribution Limit (Individual)

$3,500

$3,550

HSA Contribution Limit (Family)

$7,000

$7,100

HSA Catch-Up Contribution Limit (age 55 plus)

$1,000

$1,000

HDHP Minimum Deductible (Individual)

$1,350

$1,400

HDHP Minimum Deductible (Family)

$2,700

$2,800

HDHP Maximum Out-Of-Pocket Amount (Individual)

$6,750

$6,900

HDHP Maximum Out-Of-Pocket Amount (Family)

$13,500

$13,800

© 2019 Jones Walker LLP

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About this Author

Tim Brechtel Employee Benefits Attorney Jones Walker
Partner

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...

504-582-8236
Michael C. Seibert Tax Attorney Jones Walker Law Firm
Associate

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.

504.582.8293