Important Note

You are now leaving the Strong Valley Wealth & Pension, LLC ("Strong Valley") website. By clicking on the "Schwab Alliance Access" link below you will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with Strong Valley or any advisor(s) whose name(s) appears on this Website. Strong Valley is/are independently owned and operated. Schwab neither endorses nor recommends Strong Valley. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with Strong Valley under which Schwab provides Strong Valley with services related to your account. Schwab does not review the Strong Valley website(s), and makes no representation regarding the content of the Website(s). The information contained in the Strong Valley website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.

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

  • Mid-Quarter Roundtable Highlights

    Podcast Highlight - The Market Impact on Home and Auto Prices

    November 30, 2022
    Taking into consideration the long period of low interest rates, the team talks about how the newer rates might affect inflation and play into a recession. They also review supply issues of both new and used sales in the auto industry, touching on the question “Is it a good time to buy?”
    Read this Article

  • Boosting Employees' Savings and Keeping Talent

    January 18, 2025
    Employers with company-sponsored retirement plans, like a 401(k) or 403(b) have a tool that can be used to help retain top talent, alleviate employee concerns regarding financial stability in retirement, and help build a positive work environment.
    Read this Article
  • Inflation Varies According to Your Age & Spending

    Inflation Varies According to Your Age & Spending

    August 3, 2021
    What will inflation be in the coming years? The headline Consumer Price Index is important only as a general gauge. It may not accurately reflect your individual inflation rate. This article looks at some inflation components for you to consider, to get a better picture of your unique personal inflation rate based on your age and spending habits.
    Read this Article
  • Build A Better Tax Plan

    5 Ways to Build a Better Tax Plan

    April 20, 2021
    Here are some strategies to consider helping your financial plan become more tax-efficient.
    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.
    No, stay on StrongValley.comContinue to link
    phone-handset