Thresholds and maximums for retirement contributions and deductions
The government left some retirement numbers unchanged and increased some for 2020. The maximum you can contribute to a traditional IRA or a Roth IRA in 2020 is $6,000 if under 50 and $7,000 if 50 or older (or up to 100% of your earned income, if that is less), the same as last year. You can split your contribution between a traditional IRA and a Roth IRA, but it can’t be more than $6,000/$7,000.
Traditional IRA income limits
To have your contribution be fully deductible, your income (modified adjusted gross or MAGI) must be $65,000 or less (if single), up from $64,000 in 2019. If you’re married and filing a joint return, you can fully deduct in 2020 if your MAGI is $104,000 or less, which is up from $103,000 in 2019.
If you are not covered by an employer retirement plan, your contributions to a traditional IRA are generally fully tax deductible. If you are not covered by an employer plan but your spouse is, and you file a joint return, your deduction is limited if your MAGI is $196,000 to $206,000 (up from $193,000 to $203,000 in 2019), and eliminated if your MAGI exceeds $206,000 (up from $203,000 in 2019).
| If your 2020 federal income tax filing status is: | Your IRA deduction is limited if your MAGI is between: | Your deduction is eliminated if your MAGI is: |
| Single or head of household | $65,000 and $75,000 | $75,000 or more |
| Married filing jointly or qualifying widow(er) | $104,000 and $124,000 (combined) | $124,000 or more (combined) |
| Married filing separately | $0 and $10,000 | $10,000 or more |
Roth IRA income limits
The income limits for determining how much you can contribute to a Roth IRA have also increased for 2020. You can contribute the full amount to a Roth IRA if your MAGI is $124,000 or less (if single), up from $122,000 in 2019. If you’re married and filing a joint return, you can make a full contribution if your MAGI is $196,000 or less, up from $193,000 in 2019).
| If your 2020 federal income tax filing status is: | Your Roth IRA contribution is limited if your MAGI is: | You cannot contribute to a Roth IRA if your MAGI is: |
| Single or head of household | More than $124,000 but under $139,000 | $139,000 or more |
| Married filing jointly or qualifying widow(er) | More than $196,000 but under $206,000 (combined) | $206,000 or more (combined) |
| Married filing separately | More than $0 but under $10,000 | $10,000 or more |
Employer retirement plans
Most of the employer retirement plan limits for 2020 have increased. The maximum amount you can contribute as your “elective deferral” to a 401k plan is $19,500 in 2020 (up from $19,000 in 2019). This limit also applies to 403b and 457b plans, as well as the Federal Thrift Plan. If you’re 50 or older, you can also make catch-up contributions of up to $6,500 (up from $6,000 in 2019) for a total of $26,000. Special catch-up limits apply to certain participants in 403b and 457b plans.
If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit. Deferrals to 401k plans, 403b plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457b plans are not. For example, if you participate in both a 403b plan and a 457b plan, you can defer the full dollar limit to each plan — a total of $39,000 in 2020 (plus catch-up contributions).
The most you can contribute to a SIMPLE IRA or SIMPLE 401k is $13,500 in 2020 (up from $13,000 in 2019), and the catch-up limit for age 50 or older remains $3,000.
The maximum that can be allocated to your account in a defined contribution plan (for example, a 401k plan or profit-sharing plan) in 2020 is $57,000 (up from $56,000 in 2019) plus age 50 catch-up contributions. (This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.)
Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2020 is $285,000 (up from $280,000 in 2019), and the dollar threshold for determining highly compensated employees (when 2020 is the look-back year) is $130,000 (up from $125,000 when 2019 is the look-back year).
