New Cost of Living Adjustments for Retirement Plans in 2020

On November 1, 2019, the Internal Revenue Service announced cost-of-living adjustments (COLAs) that affect contribution limits for retirement plans in 2020. The chart below highlights key changes that retirement plan sponsors, plan particpants and IRA investors should be aware of, as well as some limits that won't change in 2020.



2019 Limit 

2020 Limit

Employee Contributions



401(k) and 403(b) elective deferral limit1



457 elective deferral limit



SIMPLE IRA elective deferral limit



SEP contribution limit



Traditional/Roth IRA contribution limit



Catch-up Contributions2



401(k) and 403(b) elective catch-up contribution limit



SIMPLE IRA catch-up contributions limit



Traditional/Roth IRA catch-up contribution limit



Total Contribution Limits



Defined contribution plan total dollar Limit



Defined benefit plan total dollar limit



Compensation Limits



Single employer compensation limit3



Highly compensated employee (HCE) income limit4



Key employee/Officer limit





With these new limits announced, now is a good time for anyone saving for retirement to ensure that they are taking full advantage of their workplace retirement plan or IRA, confirming that their beneficiary designations are up to date, and reviewing their retirement savings goals.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax preparer, professional tax advisor, and/or a lawyer.




Eric Kristenson is a Retirement Plan Consultant located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.  Financial planning services offered through Canby Financial Advisors are separate and unrelated to Commonwealth.   He can be reached at 508.598.1082 or at [email protected]



1Employee deferrals for all plans they participate in must be aggregated to determine total deferral amounts.

2Catch-up contributions are available to employees or IRA account owners age 50 or older during the calendar year.

3All compensation from a single employer, including all members of a control group, must be aggregated to determine total compensation amounts.

4For the 2020 plan year, employees are considered to be HCEs if they earned than $125,000 in 2019. For the 2021 plan year, employees must earn more than $130,000 in 2020 to be classified as HCEs.


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