IRS Benefit Plan Limits for 2020

On November 6, 2019, the Internal Revenue Service released Notice 2019-59, announcing cost-of-living adjustments that affect contribution limits for retirement plans and retirement accounts in 2020. The list below, although not exhaustive, highlights key changes that retirement plan sponsors should be aware of, as well as some limitations that remain unchanged from 2019:


  • The elective deferral limit is increasing from $19,000 to $19,500.
  • The catch-up contribution limit for employees age 50 and older is increasing from $6,000 to $6,500.
  • The aggregate contribution limit for defined contribution plans is increasing from $56,000 to $57,000.
  • The annual compensation limit used to calculate contributions is increasing from $280,000 to $285,000.
  • The limitation on the annual benefit under a defined benefit plan is increasing from $225,000 to $230,000. (For a participant who separated from service before January 1, 2020, the limitation for defined benefit plans under Section 415(b)(1)(B) can be computed by multiplying the participant’s compensation limitation, as adjusted through 2019, by 1.0176.)
  • The dollar limit used in the definition of “key employee” in a top-heavy retirement plan is increasing from $180,000 to $185,000.
  • The dollar limit used in the definition of “highly compensated employee” is increasing from $125,000 to $130,000.


The table below displays the 2019 and 2020 limits for a host of tax breaks:

401(k) Plan Limits for Plan Year 2019 Limit 2020 Limit
401(k) Elective Deferral Limit1 $19,000 $19,500
Catch-Up Contribution2 $6,000 $6,500
Defined Contribution Dollar Limit $56,000 $57,000
Compensation Limit3 $280,000 $285,000
Highly Compensated Employee Income Limit $125,000 $130,000
Key Employee Officer Limit $180,000 $185,000

Non-401(k) Limits


2019 Limit


2020 Limit

403(b) Elective Deferral Limit1 $19,000 $19,500
Defined Benefit Dollar Limit $225,000 $230,000
457 Employee Deferral Limit $19,000 $19,500



2019 Limit


2020 Limit

SEP Minimum Compensation $600 $600
SEP Maximum Compensation $280,000 $285,000
SIMPLE Contribution Limit $13,000 $13,500
SIMPLE Catch-Up Contribution2 $3,000 $3,000

IRA and Roth Limits


2019 Limit


2020 Limit

IRA and Roth Contribution Limit $6,000 $6,000
Catch-Up Contribution2 $1,000 $1,000

All compensation from a single employer (including all members of a controlled group) must be aggregated for purposes of this limit.
Contributors must be age 50 or older during the calendar year.1Employee deferrals to all 401(k) and 403(b) plans must be aggregated for purposes of this limit.


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.

Fact vs. Fiction

October 28, 2019

We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

Fiction: When having a financial planning conversation with your children, the most important decision is figuring out who deserves more or less based on “good” or “bad” behavior.

Fact: It is not unusual for family conversations on finances to devolve into discussions on gifts, inheritances, and who deserves more or less based on behavior. But the most important aspect of these conversations? How your assets will be used to pay for your health care during retirement and how much that health care will cost. To help in this process and come up with a plan of action, you will need to think about your family history (e.g., longevity, illnesses), how and where you want to live, and whom you could trust to help manage those assets and carry out your financial plan if you are no longer able to do so.