On November 6, 2019, the Internal Revenue Service (IRS) issued Notice 2019-59, which announced cost-of-living adjustments that affect the calendar year dollar limits for benefits and contributions in retirement plans. The table below reflects the 2019 limits and the new 2020 limits beginning January 1, 2020.
Background
Tax law places limits on the dollar amount of contributions to retirement plans and IRAs and the amount of benefits under a pension plan. Internal Revenue Code Section 415 requires the limits to be adjusted annually for cost-of living increases.
Action items for employers
- Update any plan document materials that identify the annual limitations
- Update participant communications as the limits may impact important benefit elections for 2020
- Update Human Resource Information Systems (HRIS) and/or payroll systems with new limitations for administration, recordkeeping and tax reporting
- Ensure all data vendor feeds are updated to comply with the new limits
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.