Retirement plan contribution limits will increase once again in 2020 as the numbers have been automatically adjusted for inflation.
The contribution limits for 401k type plans will increase from $19,000 per year in 2019 to $19,500 for tax year 2020. In addition, the catch-up limit rises from $6,000 to $6,500 for those age 50 and older.
The contribution limits for IRA and ROTH IRA contributions remain unchanged at $6,000 plus $1,000 for catch-up for those over age 50.
Income ranges for determining eligibility to make deductible contributions to Traditional IRAs or direct contributions to ROTH IRAs will also increase slightly for 2020. However, the ROTH IRA phase-out range for a married individual filing a separate return remains unchanged.
While salary deferrals through your employer may automatically adjust to the new limits if you’ve elected to defer the maximum amount each year, we recommend a review of both your annual contributions along with your investment allocation to ensure they are consistent with your savings goals and investment objectives.