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.
An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.
Related Content
HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.
The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.
Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.