Changes for 2020.
Provided by TechGirl Financial
The I.R.S. just increased the annual contribution limits on IRAs, 401(k)s, and other widely used retirement plan accounts for 2020. Here’s a quick look at the changes.
*Next year, you can put up to $6,000 in any type of IRA. The limit is $7,000 if you will be 50 or older at any time in 2020.1,2
*Annual contribution limits for 401(k)s, 403(b)s, the federal Thrift Savings Plan, and most 457 plans also get a $500 boost for 2020. The new annual limit on contributions is $19,500. If you are 50 or older at any time in 2020, your yearly contribution limit for one of these accounts is $26,000.1,2
*Are you self-employed, or do you own a small business? You may have a solo 401(k) or a SEP IRA, which allows you to make both an employer and employee contribution. The ceiling on total solo 401(k) and SEP IRA contributions rises $1,000 in 2020, reaching $57,000.3
*If you have a SIMPLE retirement account, next year’s contribution limit is $13,500, up $500 from the 2019 level. If you are 50 or older in 2020, your annual SIMPLE plan contribution cap is $16,500.3
*Yearly contribution limits have also been set a bit higher for Health Savings Accounts (which may be used to save for retirement medical expenses). The 2020 limits: $3,550 for individuals with single medical coverage and $7,100 for those covered under qualifying family plans. If you are 55 or older next year, those respective limits are $1,000 higher.4
Kim Gaxiola, CFP® may be reached at 800.584.3652 or at firstname.lastname@example.org
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1 – IRS.GOV/RETIREMENT-PLANS/PLAN-PARTICIPANT-EMPLOYEE/RETIREMENT-TOPICS-IRA-CONTRIBUTION-LIMITS [11/8/19]
2 – IRS.GOV/NEWSROOM/401K-CONTRIBUTION-LIMIT-INCREASES-TO-19500-FOR-2020-CATCH-UP-LIMIT-RISES-TO-6500 [11/6/19]
3 – FORBES.COM/SITES/ASHLEAEBELING/2019/11/06/IRS-ANNOUNCES-HIGHER-2020-RETIREMENT-PLAN-CONTRIBUTION-LIMITS-FOR-401KS-AND-MORE/ [11/6/19]
4 – CNBC.COM/2019/06/03/THESE-ARE-THE-NEW-HSA-LIMITS-FOR-2020.HTML [6/4/19]