2020 Contribution Limits for Tax-Advantaged Accounts
Happy New Year! As we begin a new year, we wanted to take the opportunity to remind individuals, families and business owners of the updated 2020 contribution limits for tax-advantaged retirement and savings accounts.
2020 Contribution Limits
- 401(k), 403(b), and 457(b) plans (including Roth):
- Employee elective deferral limit has increased to $19,500.
- The “catch-up” limit for individuals who are 50 and older increased to $6,500 ($26,000 total contribution limit).
- IRAs (Traditional and Roth):
- The contribution limit is still $6,000.
- The “catch-up” limit for individuals 50 and older remains at $1,000 ($7,000 total contribution limit).
- Non-working spouses can make a contribution if the working spouse has earned income (subject to phase-out limits depending on adjusted gross income). Please contact us to discuss this in more detail.
- There are phase-out limits for individuals and married couples with earned income exceeding certain limits.
- Self-Employed Pension (SEP):
- For self-employed individuals who have a SEP, the contribution limit has increased to the lesser of $57,000 or 25% of the participant’s compensation.
- Health Savings Accounts (HSA):
- The self-only coverage limit has increased to $3,550.
- The family coverage limit has increased to $7,100.
- The “catch-up” limit for individuals 55 and older is still $1,000. Please note: a spouse who is 55 or older can make an additional catch-up contribution, but they must have an HSA they own.
- The above limits include any employer contributions and you must be covered by a high deductible health plan that meets the “self-only” or “family” definition of coverage.
If you currently aren’t maxing out your retirement and savings contributions or haven’t started saving for retirement yet, River Capital Advisors can help you reach your goals. Our affiliated CPA firm, Smoak, Davis, & Nixon, can also help business owners determine how to maximize their retirement savings. Together, we routinely help clients maximize their retirement savings and reach their goals. Please contact us if you would like to learn more about how we can assist you.