The Internal Revenue Service (IRS) has increased the amount employees may contribute to their 401(k) and 403(b) plans next year from $19,000 to $19,500. The IRS announced this week its inflation adjustments for 2020, including:
• Overall contribution limit for defined contribution plans increases from $56,000 to $57,000.
• Total compensation that may be considered under a qualified plan increases from $280,000 to $285,000.
• Limitation for defining a highly compensated employee increases from $125,000 to $130,000.
• Catch-up contributions for 401(k) or 403(b) plans for individuals aged 50 or over increases from $6000 to $6500.
• Employee contributions to a flexible spending account increases from $2,700 to $2,750.
Be in touch with any questions and stay tuned!