Article

New Retirement Plan Contribution Limits for 2020

Gentleman sitting in a coffee shop
  • 401(k), 403(b), 457 and Thrift Savings Plan (TSP) elective deferrals have increased +$500 (under 50) and +$1,000 (over 50)
  • The defined overall contribution limits have increased +$1,000 (under 50) and +$1,500 (over50)
  • Catch-up contributions have increased from $6,000 to $6,500
  • The annual compensation limit is increased from $280,000 to $285,000
  • Official IRS Contribution Limits: Notice 2019‑59
December 6, 2019
Gentleman sitting in a coffee shop
Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

The “In Brief” bullet points cover just some of the highlights about the new compensation limits. There are other factors and regulations that may impact how these new limits apply to you specifically. Some of the factors include whether your compensation plan might fall under the “key employee” definition, or if you are a highly compensated employee. Your marital status, or the recent death of a spouse, and several other life situations may also impact your contribution limits, or at the very least potentially impact your savings strategy.

Chart showing new 2020 compensation limits

Most employees should probably be taking advantage of employer matching funds, and the amount that you choose to invest is called your elective deferrals – it does not include any contributions that your employer makes as part of the matching benefit (or even outside of the matching benefit). Essentially any contributions made on your behalf by your employer would be non-elective. The overall contributions would include both elective and non-elective contributions.

Of course, how much you should invest in your employee retirement benefit plan should be determined by creating an overall retirement strategy, and that may include additional investment and savings strategies to meet your specific financial goals and needs.

We provided the link to the IRS information for the sake of completeness and for reference, but the government has managed to pack a significant amount of complexity into a relatively short document. Strong Valley clients should contact us directly to discuss how the new limits apply in your specific situation, and in the context of your retirement strategy.

Other content you may like

  • Sticky Inflation

    Making Sense of Sticky Inflation Effects

    October 1, 2023
    Strong Valley team members Adam and Chris give a recap of September along with a discussion about how interest rates are being affected by Sticky Inflation. They also touch on the housing market, college values, and an update on the Secure Act 2.0 details that could affect your RMD.
    Read this Article
  • What's Driving the Market

    Podcast Highlight - Debt Ceiling Resolution

    June 21, 2023
    Congress recently passed a debt ceiling deal that is still being analyzed and politicized across the nation. The team gives their insight on what the fuss is all about and how the system works when a debt ceiling reaches an impasse.
    Read this Article
  • Boost Your Retirement Plan with IRAs and 401(k)s

    Boost Your Retirement Plan with IRAs and 401(k)s

    August 31, 2021
    Early planning puts time on your side. Whether retirement is around the corner or decades away, there are more options than ever to help you plan for it. Traditional IRAs, Roth IRAs and 401(k) Plans are a few popular financial vehicles which offer tax benefits. This article gives a brief summary of these options that can help you save for your future.
    Read this Article
  • Podcast Highlight - Anticipating Fed Funds Cuts

    March 14, 2024
    The Strong Valley Team gives an update on the Fed Funds and examines the relationship rates have with compounding inflation.
    Read this Article
  • The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.
    phone-handset