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IRS Announces 401(k) Contribution Limits for 2020

As employers are in the midst of open enrollment, the IRS announced today important information for the 2020 plan year: Employees can contribute $19,500 in 401(k) contributions for 2020, an increase of $500, while the combined employer and employee contribution limit rises by $1,000 to $57,000. For participants ages 50 and over, the additional "catch-up" contribution limit will increase to $6,500, up by $500. HR and payroll managers should adjust their systems for the new year and inform employees about the new limits in year-end open enrollment materials. Because the IRS announced the 2020 contribution changes so late this year, many plan sponsors will need to provide addendums to benefits materials that have already been printed for the 2020 benefits open enrollment period.

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