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IRS Announces 2020 Qualified Retirement Plan Limits

The IRS recently announced the inflation-adjusted limits for 2020 for tax qualified retirement plans. Below is a list of some of the key annual limits that will apply in 2020:

• Compensation limit used in calculating a participant’s benefit accruals: increased to $285,000.

• Elective deferrals to 401(k) and 403(b) plans: increased to $19,500.

• Annual additions to a defined contribution plan: increased to $57,000.

• Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: increased to $6,500.

• Annual benefit limit for a defined benefit plan: increased to $230,000.

• Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $185,000.

• Compensation dollar limit for defining a “highly compensated employee”: increased to $130,000.

The complete list of 2020 plan limits is available in Notice 2019-59 here.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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