2020 Qualified Plans Deduction Limits

MVP Plan Administrators, Inc. is pleased to announce the Pension Plan Limitations for 2020.

Elective Deferrals 402(g) for 401(k), 403(b) and 457 Plans – This limit is combined for Roth or Pre-tax deferral elections. The limit on elective deferrals (again a combined Roth or pre-tax) for participants in 401(k), 403(b) and 457 plans (excluding SIMPLE plans) is increased from $19,000 to $19,500.

Catch-up contributions 414(v)(2)(B)(i) – A participant who is at least age 50 before the end of the calendar year may be eligible to make catch-up contributions. This amount is in addition to the Elective Deferrals and can be either a Roth or Pre-tax election. The catch-up limit is increased from $6,000 to $6,500.

Simple Plans Elective Deferrals – This limit is combined for Roth or Pre-tax deferral elections. The limit on elective deferrals (again a combined Roth or pre-tax) for participants is increased from $13,000 to $13,500.

Simple Plans Catch-up contributions – This limit is combined for Roth or Pre-tax deferral elections. The limit on elective deferrals (again a combined Roth or pre-tax) remains unchanged at $3,000.

Limitation for Defined Contribution Plans 415(c)(1)(A) – This limitation is a total aggregate contribution including elective deferral (Pretax or ROTH) contributions, employer contributions and forfeitures. This limit is increased from $56,000 to $57,000.

The Annual Compensation Limit under Sections 401(a)(17), 404(l) – This is the maximum amount of compensation that may be considered for plan purposes. This limit is increased from $280,000 to $285,000.

Social Security Taxable Wage Base – This is the dollar limitation that social security tax is paid. This wage amount is also used in the formula for permitted disparity (integrated) plans and is increased from $132,900 to $137,700.

The Limitation used to define a Highly Compensated Employee under Section 414(q)(1)(B) – This is the dollar limit for determining which participants will be considered Highly Compensated Employees. This limitation is increased from $125,000 to $130,000.

The Limitation used to define Key Employee under Section 416(i)(1)(A)(i) – This is the dollar limit used for determining which participants will be considered a Key Employee for a top-heavy plan. This limitation is increased from $180,000 to $185,000.

Please feel free to contact us with any questions you may have. Thanks!