Under the Internal Revenue Code, the IRS is required to annually adjust the limits that apply to retirement plan contributions and benefits for cost-of-living increases. The limits for 2020 have now been announced by the IRS, as follows:
| Item |
2019 Limit |
2020 Limit |
| Limit on recognizable retirement plan compensation |
$280,000 |
$285,000 |
| Limit on total annual contributions for defined contribution (DC) retirement plans |
$56,000 |
$57,000 |
| Limit on annual benefit under a defined benefit (DB) plan |
$225,000 |
$230,000 |
| General limit on elective deferrals to 401(k), 403(b), 457(b) plans |
$19,000 |
$19,500 |
| Limit on catch-up contributions for individuals age 50 and over |
$6,000 |
$6,500 |
| Threshold for determining highly compensated employee (HCE) |
$125,00 |
$130,000 |
| Threshold for determining key employee in top-heavy plan |
$180,000 |
$185,000 |
| SIMPLE retirement plan deduction limit |
$13,000 |
$13,500 |
| SIMPLE retirement plan limit on catch-up contributions for individuals age 50 and over |
$3,000 |
$3,000 |
| Social Security Taxable Wage Base |
$132,900 |
$137,700 |