Retirement Plan Contribution Limits for 2020

While the coronavirus pandemic and associated economic and stock market declines may cause you to consider putting retirement plan contributions on hold, it’s important to stay focused on your long-term retirement planning goals.

If you have the means, you should generally continue to invest in retirement savings accounts, perhaps even to the 2020 retirement plan contribution limits. Consider using strategies like dollar-cost averaging to invest the same amount continually, such as a percentage of each paycheck, into your retirement plan. Such strategies can help you feel less pressure to try to time the market and better able to ride out the volatility.

Now might be an ideal time to speak with a trusted financial advisor about your risk management and overall financial plan. In doing so, see how much you can comfortably contribute to your retirement accounts up to the 2020 contribution limits, which we have included below.

Workplace Retirement Plans

If you participate in a workplace retirement plan, such as a 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, you can contribute up to $19,500 for tax year 2020, up from $19,000 the year prior.

Plus, if you’re age 50 or older and want to save more into your workplace retirement plan, you can take advantage of the increase to the catch-up contribution limit: For 2020, you can make catch-up contributions up to $6,500, compared with $6,000 the year prior.

Workers who contribute to a SIMPLE (Savings Incentive Match Plan for Employees) retirement plan can also benefit from a higher 2020 retirement plan contribution limit of $13,500 for 2020, up from $13,000.


For both traditional IRAs and Roth IRAs, the 2020 retirement plan contribution limit remains the same as it was for tax year 2019: $6,000, plus a $1,000 catch-up contribution limit for those age 50 or older.

Additional IRA Changes

While the 2020 contribution limits remain the same for IRAs, you may be able to save on taxes due to changes to income limits. For example, if you use a traditional IRA because you lack access to a workplace retirement plan, but your spouse does have a workplace plan, your ability to deduct IRA contributions gets phased out above certain income limits.

For tax year 2020, married couples filing jointly who earn up to $196,000 can fully deduct IRA contributions if they meet the requirements, up from $193,000 the year before. Those earning up to $206,000 per year can take a partial deduction, compared with $203,000 the prior year.

In addition, with the passage of the SECURE Act, you can now contribute to traditional IRAs at any age, rather than being capped at age 70 ½, as MarketWatch explains.

For married couples filing jointly, the phase-out range to make Roth IRA contributions in 2020 is $196,000–$206,000, up $3,000 on both ends of this range from the year before. These higher income limits could potentially yield more retirement income if you’re able to save in these accounts since Roth IRAs grow and can be withdrawn tax-free.

Financial Planning with 2020 Retirement Plan Contribution Limits in Mind

Given the current economic situation, your financial plan may need to be adjusted to account for changes to your cash flow. Still, it’s important to remain committed to your retirement plan, and those who can save up to the maximum may want to do so.

Even if markets struggle in the near term, you may benefit from the tax savings that come from contributing to tax-advantaged retirement savings accounts like 401(k)s and IRAs while allowing those contributions to grow long term.

Our financial planning firm in Richmond, VA, is here to help you learn more about your retirement plan contribution limits and discuss how you can continue your retirement planning amidst challenging circumstances. To discuss your personal situation with a financial advisor in more detail, schedule a complimentary 30-minute phone call.


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