2020 Retirement Account Maximum ContributionsSubmitted by Mission Financial Planning on January 10th, 2020
We love it when clients maximize investments in your tax-advantaged plans. For 2020, some maximum contribution limits changed and others did not. Here’s a quick listing of maximum contributions for various types of retirement plans:
No change for 2020:
IRAs: Up to $6,000 to a Roth or Traditional IRA, or $7,000 if you're age 50 and up.
Want to deduct your Traditional IRA contribution? If you and/or your spouse are covered by a retirement plan through work, you can deduct your IRA contributions if your income is less than $104,000 (married) or $65,000 (single). If neither you or your spouse is covered by a retirement plan at work, there are no income limits on deductibility.
Qualify for a Roth if: your income is less than $174,000 (married) or $124,000 (single). If your income is above this level, you may be able to make a non-deductible contribution to an IRA and convert it to a Roth. As you might imagine, there are some rules and restrictions involved – call us and we’ll walk you through it!
Whether a Roth or Traditional is right for you is a very personal decision based on age and future tax brackets, we can help with that decision.
Increased for 2020:
401k: The allowable maximum employee contribution went up to $19,500. If you are age 50 and up, the additional catch-up contribution limit is $6,500.
With the right combination of employee and employer contributions, a person can get up to $57,000 into a 401k (plus $6,500 if over age 59) in 2020.
Simple IRA Plan: The maximum you can put into a Simple as an employee is $13,500. If you are age 50 or over, you can add an extra $3,000. Contribution from the employer is not included in this limit.
SEP IRA: An employer can contribute up to 25% of an employee's gross annual salary or $57,000, whichever is less, the calculation is slightly different if you’re self-employed.
Healthcare Savings Accounts (HSA): For an individual plan, the maximum HSA contribution is $3,550. The HSA contribution limit for family coverage increased to $7,100. “Catch up” contributions also apply to HSA accounts; for those over age 55, add another $1,000.
Just knowing the limits isn’t enough— each one of these investments has a whole set of rules and variables. We can help you navigate the ins and outs and figure out which might work best for you. For help deciding if you need a different plan, give us a call and we’ll talk through the pros and cons of these types of plans. We’d love to hear from you.