With 2020 just around the corner, the IRS announced important information for the upcoming year for both 401(k) Contributions and Health Saving Accounts (HSAs).
401(k) Contribution limits for 2020
Employee 401(k) contributions for 2020 will increase by $500 to $19,500, while the total for employer plus employee contribution limit increases by $1,000 to $57,000.
For participants ages 50 and over, the "catch-up" contribution limit will rise to $6,500, up by $500.
HSA Contribution limits for 2020
The annual limit on deductible contributions is $3,550 for individuals with self-only coverage under an HDHP (a $50 increase from 2019) and $7,100 for family coverage (a $100 increase from 2019).
The limits on annual deductibles are also subject to annual inflation adjustments. For 2020, the lower limit on the annual deductible for an HDHP is $1,400 for self-only coverage and $2,800 for family coverage, both increased from 2019. The upper limit for out-of-pocket expenses is $6,900 for self-only coverage and $13,800 for family coverage, both increased from 2019
The new limits will take effect January 1, 2020, HR and payroll managers should plan to adjust their systems for the new year and inform employees about the new limits - especially for those with a year-end open enrollment.
For questions about your 401(k) Plan or Health Savings Accounts, the recent changes to IRS Contribution Limits, or any other Tax questions, please contact Priscilla A. Grant, Esq.