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Notice 2019-59: Pension plans, cost-of-living adjustments for 2020

Pension plans, cost-of-living adjustments for 2020

The IRS today released an advance version of Notice 2019-59 providing the dollar limitations for qualified retirement plans for tax year 2020.

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Changes for 2020

Notice 2019-59 [PDF 57 KB] and a related IRS release—IR-2019-179 (November 6, 2019)—note the following changes in amounts from 2019 to 2020 (the amounts for 2019 are shown in parenthesis):

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $19,500 (up from $19,000).
  • The catch-up contribution limit for employees age 50 years and over who participate in these plans is $6,500 (up from $6,000).
  • The limitation regarding savings incentive match plan for employees (SIMPLE) retirement accounts for 2020 is $13,500 (up from $13,000).
  • The income ranges for determining eligibility to make deductible contributions to traditional individual retirement arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increase for 2020.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified adjusted gross income (AGI) within a certain range. 
    • For single taxpayers who are covered by a workplace retirement plan, the income phase-out range is increased to $65,000 to $75,000 (up from $64,000 to $74,000). 
    • For married couples filing jointly, when the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is increased to $104,000 to $124,000 (up from $103,000 to $123,000). 
    • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000 (up from $193,000 and $203,000).
  • The income phase-out range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and heads of household (up from $122,000 to $137,000). For married couples filing jointly, the income phase-out range is $196,000 to $206,000 (up from $193,000 to $203,000).
  • The income limit for the saver's credit—also known as the retirement savings contributions credit—for low- and moderate-income workers is $65,000 for married couples filing jointly (up from $64,000); $48,750 for heads of household, (up from $48,000); and $32,500 for singles and married individuals filing separately (up from $32,000).

Unchanged limits for 2020

The limitations that remain unchanged for 2020, from 2019, include the following:

  • The limit on annual contributions to an IRA remains unchanged at $6,000.
  • The additional catch-up contribution limit for individuals age 50 years and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified AGI within a certain range. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

 

The IRS also provided this information in table format.

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