December 27, 2019

IRS Announces Cost of Living Adjustments for 2020

By Diane Giordano, Partner, Tax & Business Services

Related Services Tax & Business, Tax Advisory Services, Family Wealth Services, Modern Family & LGBT Services, Personal Financial Management, Tax Return Compliance

IRS Announces Cost of Living Adjustments for 2020 Tax & Business

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.