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

  • Special Guest David Lebovitz, JP Morgan

    November 17, 2023
    The Strong Valley advisor team, Kyle, Jason, Chris and Adam, are joined by special guest David Lebovitz, JP Morgan Asset Management, Global Market Insights Strategy Team Managing Director to discuss an overview of the market, inflation, Federal Funds rates, and long term investment success. David is responsible for delivering timely market and economic insights to clients across the country, along with helping to build the Market Insights program in the United Kingdom and Europe. He has appeared on both Bloomberg TV and CNBC, and is often quoted in the financial press.
    Read this Article
  • Career Advancement vs Job Security

    April 6, 2024
    Changing jobs can be a difficult decision, but it can also be a great opportunity for growth and advancement in your career. However, when companies do layoffs, it can be a stressful and uncertain time for employees. Here are some ideas to think about when balancing the Pros and Cons of changing jobs.
    Read this Article
  • Peak Yield Curve Inversion?

    September 26, 2023
    This month’s Student of the Market explores the peak yield curve inversion and what happens in the gap between short-term and long-term interest rates, along with looking at the real yield impact of inflation. You’ve probably noticed that upcoming elections are ramping up quickly. Here’s a peak at historical stock returns in election years and what might be on the horizon.
    Read this Article
  • Is The University of Michigan Consumer Sentiment Too Pessimistic?

    April 15, 2025
    What is happening with the latest economic data? Both the hard and soft data have been softening. Do you know the difference? What does this mean for our economic outlook at home? Let’s take a look at the GDP, inflation and durable goods, as well as consumer sentiment.
    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