2020 Updates. Know Your Limits on Spending Accounts, Savings Accounts, 401K, Catch Up Contributions and More.
The IRS has released the 2020 cost-of-living adjustments applicable to the dollar limitations on benefits and contributions of retirement plans and health and welfare benefit plans. The Internal Revenue Service announced that employees in 401(k) plans will be able to contribute up to $19,500 next year. The IRS announced this and other changes in Notice 2019-59 (PDF), posted on IRS.gov. This guidance provides cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020. These limits are effective January 1, 2020. Below is an updated chart on 2020 limits.
Limits for 2020 – Qualified Plans
| Limitation | 2019 | 2020 |
| Elective Deferrals (401(k) and 403(b) pre-tax contributions; 457(b), 402(g)(3)) | $19,000 | $19,500 |
| Catch-up Contributions – 401(k), 403(b), 457(b), SARSEP plans | $6,000 | $6,500 |
| Highly Compensated Employee (HCE) – 414(q) | $125,000 | $130,000 |
| Annual Compensation Limit – 401(a)(17), 404(l), 408(k)(3)(C), 408(k)(6)(D)(ii) | $280,000 | $285,000 |
| Key employee – 416(i)(1)(A)(i), top heavy and 409A specified employee | $180,000 | $185,000 |
| Defined Contribution Plan total annual contributions – 415(c) | $56,000 | $57,000 |
| Defined Benefit Plan Maximum benefit – 415(b) | $225,000 | $230,000 |
| ESOP – for determining the length of the general five-year distribution period | $225,000 | $230,000 |
| ESOP – maximum account balance subject to five-year distribution period | $1,130,000 | $1,150,000 |
Limits for 2020 – Tax Withholding Wage Base
| Limitation | 2019 | 2020 |
| Taxable Wage Base | $132,900 | $137,700 |
Limits for 2020 – High Deductible Plans, Health Savings Account and FSAs
| Limitation | 2019 | 2020 |
| High Deductible health plan – IRS limits self/family
-annual deductible –minimum -out of pocket expenses (HSA) – maximum |
$1,350/$2,700 $6,750/$13,500 |
$1,400/$2,800 $6,900/$13,800 |
| HSA Contribution limit – individual/family | $3,500/$7,000 | $3,550/$7,100 |
| HSA Contribution catch-up | $1,000 | $1,000 |
| FSA (flexible spending account – health) | $2,700 | $2,750 |
| FSA (dependent care account) | $5,000 | $5,000 |
| Out of pocket expenses (ACA) -PHSA §2707(b) maximum (in-network essential health benefits for non-grandfathered plans)
Self Only Embedded Individual Max within Family Coverage Family |
$7,900 $7,900 $15,800 |
$8,150 $8,150 $16,300 |
Limits for 2020 – Affordable Care Act
| Limitation | 2019 | 2020 |
| ACA affordability safe harbor | 9.86% | 9.78% |
Penalties for 2020 – Affordable Care Act
| Penalty | 2019 | 2020 |
| No Offer of Coverage | $2,500 | $2,570 |
| Offer of coverage lacks minimum value or affordability | $3,750 | $3,860 |
Limits for 2020 – Qualified Transportation Fringe Benefit
| Limitation | 2019 | 2020 |
| Transit pass, van pool | $265 | $270 |
| Qualified Parking | $265 | $270 |
PBGC Premiums for Defined Benefit Pension Plans – 2020
| Premium | 2019 | 2020 |
| Flat rate per participant | $80 | $83 |
| Variable rate for $1,000 of unfunded vested benefits | $43 | $45 |
| Per Participant Variable Cap | $541 | $561 |