December 27, 2019
IRS Announces Cost of Living Adjustments for 2020
By Diane Giordano, Partner, Tax & Business Services
The Internal Revenue Service (IRS) has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for 2020.
Adjustment highlights and the related 2019 limits include:
| 2019 | 2020 | |
|---|---|---|
| Compensation Limit [IRC Sec. 401(a)(17)] | $280,000 | $285,000 |
| Defined Benefit Plan Annual Benefit Limit | $225,000 | $230,000 |
| Defined Contribution Plan Annual Contribution Limit | $56,000 | $57,000 |
| Social Security Tax Wage Base | $132,900 | $137,700 |
| Highly Compensated Employee Compensation Threshold | $125,000 | $130,000 |
| Key Employee Officer Compensation Threshold | $180,000 | $185,000 |
| SEP Compensation Threshold | $600 | $600 |
| 401(k), 403(b), 457(b), and SARSEPs Elective Deferral Limit | $19,000 | $19,500 |
| Catch-up Contribution | $6,000 | $6,500 |
| SIMPLE Plan Elective Deferral Limit Catch-up Contribution |
$13,000 $3,000 |
$13,500 $3,000 |
| IRA Contribution Limit Catch-up Contribution |
$6,000 $1,000 |
$6,000 $1,000 |
| Traditional IRA Deduction Phaseout (AGI) Single, Head of Household Married Filing Separate – any spouse participates Married Filing Joint – nonparticipating spouse Married Filing Joint – participating spouse |
$64,000/$74,000 $0/$10,000 $193,000/$203,000 $103,000/$123,000 |
$65,000/$75,000 $0/$10,000 $196,000/$206,000 $104,000/$124,000 |
| Roth IRA Contribution Eligibility (AGI) Married Filing Joint Single, Head of Household Married Filing Separate – any spouse participates |
$193,000/$203,000 $122,000/$137,000 $0/$10,000 |
$196,000/$206,000 $124,000/$139,000 $0/$10,000 |
Additional information regarding limits can be found on IRS.gov or by consulting with your Marcum tax advisor. Additional details can also be found in the 2019 Marcum Year- End Tax Guide.
