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.

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
Amount over maximum balance for lengthening five-year ESOP payout period $230,000 $225,000

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Joan Neri

Joan Neri provides counsel to employer plan sponsors and plan service providers in fulfilling their obligations under the Employee Retirement Income Security Act (ERISA) and complying with the Internal Revenue Code rules governing employee benefit plans. Joan advises on ERISA fiduciary status and responsibilities, avoidance of prohibited transactions, the considerations associated with structuring, developing and offering investment products and services to ERISA plans, and day-to-day plan operational and compliance issues. View all posts by

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