Current Federal Tax Developments

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Annual Inflation Adjustments for Retirment Plans Announced

The IRS has released the 2020 inflation adjusted limits for qualified retirement plans and IRAs in Notice 2019-59.[1]

The revised numbers and prior 2019 amounts are provided in the table below:

Type 2020 Amounts 2019 Amounts
Maximum annual benefit-DB Plan (§415) $ 230,000 $ 225,000
Contribution limit DC Plan (§415) 57,000 56,000
Annual Compensation Limit (§404(l)) 285,000 280,000
Catch up Contributions to Employer Plan 6,500 6,000
Elective Deferrals (§402(g)) 19,500 19,000
Highly Compensated Employee (§414(q)) 130,000 125,000
Key Employee Compensation (§416(i)) 185,000 180,000
SIMPLE Deferral Limitation (§408(p)) 13,500 13,000
SIMPLE Catch Up Contribution (414(v)(2)(B)) 3,000 3,000
SEP Compensation Limit (§408(k)) 600 600
IRA Limitations
Maximum IRA Contribution (before catch-up) (§219(b)(5)(A)) 6,000 6,000
Deduction phases out for individuals that are an active participant in an employer plan for adjusted gross income between Single and Head of Household - $65,000 to $75,000 Single and Head of Household - $64,000 to $74,000
Married Filing Joint - $104,000 - $124,000 Married Filing Joint - $103,000 - $123,000
Married Filing Separate - $0 - $10,000 Married Filing Separate - $0 - $10,000
Deduction phases out for individuals whose spouse is an active participant in an employer plan phases out between $196,000 - $206,000 $193,000 - $203,000
Roth IRA Maximum Contribution Phaseout Begins:
Married filing joint 196,000 193,000
Other except married filing separate 124,000 122,000

The IRS normally publishes this update each year around the end of October or the beginning of November.


[1] Notice 2019-59, November 6, 2019, retrieved November 6, 2019