Tom and John Mills' Common Cents: New IRS contribution limits for 2020
Common Cents

Tom and John Mills' Common Cents: New IRS contribution limits for 2020

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The IRS just announced the annual contribution limits on IRAs, 401(k)s, and other widely used retirement plan accounts for 2020.

Here’s a quick look at them:

  • Next year, you can put up to $6,000 in any type of IRA. The limit is $7,000 if you will be 50 or older at any time in 2020.
  • Annual contribution limits for 401(k)s, 403(b)s, the federal Thrift Savings Plan, and most 457 plans also get a $500 boost for 2020. The new annual limit on contributions is $19,500. If you are 50 or older at any time in 2020, your yearly contribution limit for one of these accounts is $26,000.
  • Are you self-employed, or do you own a small business? You may have a solo 401(k), which allows you to make both an employer and employee contribution.
    The ceiling on total solo 401(k) contributions rises $1,000 in 2020, reaching $57,000. This is also the 2020 employer contribution limit for simplified employee pension (SEP) plans.
  • If you have a SIMPLE retirement account, next year’s contribution limit is $13,500, up $500 from the 2019 level. If you are 50 or older in 2020, your annual SIMPLE plan contribution cap is $16,500.
  • Yearly contribution limits have also been set a bit higher for Health Savings Accounts (which may be used to save for retirement medical expenses).
    The 2020 limits: $3,550 for individuals with single medical coverage and $7,100 for those covered under qualifying family plans. If you are 55 or older next year, those respective limits are $1,000 higher.

Tom and John Mills are registered investment advisers and certified financial planners. Reach them at 254-0155. MillsWealth.com. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Strategic Wealth Advisors Group (SWAG), a registered investment adviser.

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