IRA announcing the cost of living adjustments for 2020

IRC Section 415 requires that plan limits be adjusted annually for cost-of-living increases. These adjustments are calculated and released by the Internal Revenue Service (IRS) each year. Today, the IRS announced the tax year 2020 annual inflation adjustments. A few notable changes for 2020, outlined in Notice 2019-59, include the increase of the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan from $19,000 to $19,500. Catch-up contribution limits for individuals ages 50 and over enrolled in applicable plans increased by $500 to $6,500 for 2020. Additionally, the maximum deferral contribution for a Medical FSA benefit was increased by $50 to $2,750. The IRA limit will remain unchanged at $6,000 for 2020.

A detailed listing of the 2020 limits is provided below:

Plan Limits 2020 2019 2018
401(k)/403(b) Deferrals $19,500* $19,000 $18,500
401(k)/403(b) Catch Up $6,500* $6,000 $6,000
SIMPLE Deferrals $13,500* $13,000 $12,500
SIMPLE Plan Catch Up $3,000 $3,000 $3,000
457 Deferrals $19,500* $19,000 $18,500
IRA $6,000 $6,000 $5,500
IRA Catch Up $1,000 $1,000 $1,000
Defined Contribution $57,000* $56,000 $55,000
Defined Benefit $230,000* $225,000 $220,000
Includible Compensation $285,000* $280,000 $275,000
Tax Credit ESOP Maximum Balance $1,150,000* $1,130,000 $1,105,000
Social Security Taxable Wage Base $137,700* $132,900 $128,400
SEP Min. Participation Threshold $600 $600 $600
SEP Maximum Participation Threshold $285,000* $280,000 $275,000
Key Employee $185,000* $180,000 $175,000
Highly Compensated Employee  $130,000* $125,000 $120,000
Maximum Monthly Social Security $3,011* $2,861 $2,788
HSA Individual Contribution $3,550* $3,500 $3,450
HSA Family Contribution $7,100* $7,000 $6,900
HDHP Minimum Individual Deductible  $1,400* $1,350 $1,350
HDHP Minimum Family Deductible $2,800* $2,700 $2,700
Monthly Transit/Van Pooling $270* $265 $260
Monthly Qualified Parking $270* $265 $260
FSA Medical Maximum Deferral $2,750* $2,700 $2,600
FSA Dependent Care Maximum Deferral $5,000 $5,000 $5,000

* Indicates a change from 2019 to 2020.


Download the complete list of 2020 limitations for benefit plans (PDF).