2020 Retirement Plan Updates from IRS
Ryan Turbyfill, MBA
IRS just announced increases to retirement plan contributions for 2020, some didn’t increase, others did slightly.
This can make a big difference in retirement for the options that did have an increase. Take Sally for example at 35 years old, now being able to contribute another $500/year for the next 30 years into a SIMPLE IRA at a 6% return, she now has over an additional $27k in retirement just from this increase.
Below are the increases per the IRS increase for 2020:
|
Type of Account
|
2019 Limit
|
2020 Limit
|
|
Traditional IRA
|
$6,000
|
$6,000 unchanged
|
|
Roth IRA
|
$6,000
|
$6,000 unchanged
|
|
HSA – Single
|
$3,500
|
$3,550
|
|
HSA – Family
|
$7,000
|
$7,100
|
|
SIMPLE IRA
|
$13,000
|
$13,500
|
|
SEP IRA
|
$56,000
|
$57,000
|
|
Most 401(k), 403(b), 457
|
$19,000
|
$19,500
|
|
Total Defined Contribution
|
$56,000
|
$57,000
|
*Depending on Defined Contribution (401k), higher limits maybe allowed
*Some of the above have income requirements to meet limits above
The IRS allows a “catch up” contribution of an additional $1,000 to those 50 and over, which didn’t change from 2019 and an extra $6,500 in a 401(k) up $500 from 2019.
IRA’s have income limits for who can contribute and those income phase-out ranges have also been increase.
|
Filer
|
2019 Phase Out
|
2020 Phase Out
|
|
Traditional IRA
|
|
|
|
Single Filer w/ Plan @ work
|
$64,000-$74,000
|
$65,000-$75,000
|
|
Married Joint w/ Plan @ work
|
$103,000-$123,000
|
$104,000-$124,000
|
|
Married Joint Only 1 w/ Plan Wk
|
$193,000-$203,000
|
$196,000-$206,000
|
|
Roth IRA
|
|
|
|
Single and Head of Household
|
$122,000-$137,000
|
$124,000-$139,000
|
|
Married Joint
|
$193,000-$203,000
|
$196,000-$206,000
|
As always, would love to talk with you about how to implement these changes into your financial plan to provide a clear path to your financial goals.
**This is not deemed to be Tax or Legal Advise**
Source: https://www.irs.gov/pub/irs-drop/n-19-59.pdf
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
https://www.cnbc.com/2019/06/03/these-are-the-new-hsa-limits-for-2020.html
Sincerely,
Capstone Investment Financial Group, LLC
719-477-9883
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