The Internal Revenue Service (IRS) announced today cost-of-living adjustments affecting dollar limitations for retirement plans that will take effect for 2020. (Read the IRS Notice.) Highlights from the announcement include the following:
- The contribution limit for elective deferrals to 401(k), 403(b), and 457(b) plans increases from $19,000 to $19,500
- The catch-up contribution limit for elective deferrals to such plans for employees age 50 and older increases from $6,000 to $6,500
- The annual compensation limit for amounts taken into account under a tax-qualified retirement plan increases from $280,000 to $285,000
- The overall annual limitations on benefits set forth in Section 415 of the Internal Revenue Code increases from $56,000 to $57,000 for defined contribution retirement plans and $225,000 to $230,000 for defined benefit retirement plans
- The compensation threshold used to define highly compensated employees increases from $125,000 to $130,000
If you have questions about this announcement, please reach out to Randy Tracht or your Morgan Lewis contact.