IRS Announces 2020 Dollar Limits for Employee Benefit Plans
By Joan Neri
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.
| PLAN CONTRIBUTIONS/BENEFITS | 2020 LIMIT | 2019 LIMIT |
| 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 |
| Account 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.
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