IRS Announces 2020 Cost-of-Living Adjustments For Retirement Plans and for Health and Welfare Benefit Plans
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Foster Swift Business & Tax Law News
November 22, 2019
The IRS has announced the 2020 cost-of-living adjustments for retirement plan and health and welfare benefit plan limitations. The charts below set forth the applicable limitations.
Retirement Plans
Almost all of the limitations that apply to retirement plans have increased for 2020. Below is a review of the key changes:
| Retirement Plan Limitation | 2019 Limit | 2020 Limit |
| 401(k) and 403(b) Employee Contribution Limit | $19,000 | $19,500 |
| "Catch-Up Contribution" Limit | $6,000 | $6,500 |
| Defined Contribution Maximum Contribution | $56,000 (plus “Catch-Up”) | $57,000 (plus “Catch-Up”) |
| Defined Benefit Annual Benefit Limit | $225,000 | $230,000 |
| Highly Compensated Employee Compensation | $125,000 | $130,000 |
| Top-Heavy Key Employee Officer Dollar Limit | $180,000 | $185,000 |
| Annual Compensation Limit | $280,000 | $285,000 |
| 457 Plan Contribution Limit | $19,000 | $19,500 |
| Social Security Taxable Wage Base | $132,900 | $137,700 |
Health and Welfare Benefit Plans
Certain limitations that apply to health and welfare benefit plans remain unchanged, including the catch-up limit for Health Savings Account contributions and to a dependent care assistance plan (DCAP). However, many other limitations have changed, as noted in the following chart:
| Health and Welfare Benefit Plan Limitation | 2019 Limit | 2020 Limit |
| Health FSA Contribution Limit | $2,700 | $2,750 |
| Health Savings Account (HAS) Contribution Limits: | $7,000 | $7,100 |
| HSA Annual Deduction Minimums: | $2,700 | $2,800 |
| HSA Out-of-Pocket Minimums: | $13,500 | $13,800 |
| DCAP Limit | $5,000/$2,500 (if married, filing separately) | $5,000/$2,500 (if married, filing separately) |
| Qualified Transportation Fringe Benefit Monthly Limits: |
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If you have question related to these limits or how they affect the administration of your plan, please contact a Foster Swift employee benefits attorney.