401(k) Plan Limits
| Defined Contribution Plans | 2020 | 2019 | Change |
Maximum employee elective deferral | $19,500 | $19,000 | +$500 |
Employee catch-up contribution (if age 50 or older by year-end) 1 | $6,500 | $6,000 | +$500 |
Maximum employee elective deferral plus catch-up contribution (if age 50 or older by year end) | $26,000 | $25,000 | +$1,000 |
Defined contribution maximum limit, all sources (employee + employer) 2 | $57,000 | $56,000 | +$1,000 |
Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources plus catch-up | $63,500 | $62,000 | +$1,500 |
Employee compensation limit for calculating contributions | $285,000 | $280,000 | +$5,000 |
Key employees' compensation threshold for nondiscrimination testing 3 | $185,000 | $180,000 | +5,000 |
Highly compensated employees’ threshold for nondiscrimination testing 4 | $130,000 | $125,000 | +5,000 |
1 The $6,500 catch-up contribution limit for participants age 50 or older applies from the start of the year for those turning 50 at any time during the year. 2 Total contributions from all sources may not exceed 100% of a participant's compensation. 3 Includes officers of the company sponsoring the plan. 4 For the 2020 plan year, an employee who earns more than $125,000 in 2019 is an HCE. For the 2021 plan year, an employee who earns more than $130,000 in 2020 is an HCE. | |||
Source: IRS Notice 2019-59.
View the SHRM Online article 401(k) Contribution Limit Rises to $19,500 in 2020.
HSA and HDHP Limits
| Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs) | 2020 | 2019 | Change |
HSA contribution limit | Self-only: $3,550 | Self-only: $3,500 | Self-only: +$50 |
HSA catch-up contributions | $1,000 | $1,000 | No change |
HDHP minimum deductibles | Self-only: $1,400 | Self-only: 1,350 | Self-only: +$50 |
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) | Self-only: $6,900 | Self-only: $6,750 | Self-only: +150 |
Source: IRS Notice 2019-25.
View the SHRM Online article 2020 HSA Limits Rise Modestly, IRS Says.
Health FSA Limits
Health Care Flexible Spending Accounts (Health FSAs) and Limited-Scope (Vision/Dental) FSAs | 2020 | 2019 | Change |
Maximum salary deferral contribution | $2,750 | $2,700 | +$50 |
Source: IRS Notice 2019-44.
View the SHRM Online article 2020 FSA Contribution Cap Rises to $2,750.
QSEHRA Limits
| Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) | 2020 | 2019 | Change |
Maximum payments and reimbursements through the QSEHRA | Self-only: $5,250 | Self-only: $5,150 | Self-only: +$100 |
Source: IRS Notice 2019-44.
View the SHRM Online article QSEHRAs Help Small Employers Solve the Health Care Coverage Puzzle.
Commuter Transit and Parking Limits
Qualified Transportation Benefit Tax Exclusion (monthly limits) | 2020 | 2019 | Change |
Transit passes and van pool services (employer + employee) | $270 | $265 | +$5 |
Qualified parking | $270 | $265 | +$5 |
Source: IRS Notice 2019-44.
View the SHRM Online article Commuter Benefits Are an Investment in Employees.
Earnings Subject to Social Security Payroll Tax
Social Security (FICA) Payroll Tax | 2020 | 2019 | Change |
Maximum earnings subject to Social Security 12.4% FICA payroll tax (6.2% paid by employer and 6.2% paid by employee) | $137,700 | $132,900 | +$4,800 |
Source: Social Security Administration.
View the SHRM Online article 2020 Payroll Taxes Will Hit Higher Incomes.
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