Annual Maximum Contribution Limits
will Increase in 2020
2020 Contribution Limits
For the third year in a row, the IRS has increased the annual maximum contribution limit for employees participating most 457 plans – like the MO Deferred Comp Plan. State employees may contribute up to $19,500 to their deferred comp accounts next year, which is an increase from $19,000 in 2019. The catch-up contribution limit for employees 50 and over who participate in deferred comp will increase by $500 for a total of $6,500. Lastly, those within three years of retirement and who have never maxed out before, may contribute $39,000, double the regular annual amount.
Contribution limits are determined by either an increase or decrease in the cost-of-living index and directly affects how much you can contribute to your MO Deferred Comp account. This annual contribution limit increase will allow you to save more money now, in order combat the rising cost of living in the future. Below are the contribution limits for the 2020 tax year.
|Maximum Annual Deferral – under age 50||$19,500|
|Age 50 and Over Catch-up Provision Limit||$6,500 ($26,000 total)|
|Pre-Retirement Catch-up Provision Limit||$19,500 ($39,000 total)|
2020 Saver's Credit Limits
Changes were also made to the adjusted gross income (AGI) maximum limit to qualify for the saver's credit. The saver’s credit, also known as the retirement savings contribution credit, is a special tax break for low- and moderate-income taxpayers who are saving for retirement. The level of credit you receive – 50%, 20% or 10% – depends on your adjusted gross income and filing status in the tax year you made retirement contributions.
The 2020 Saver's Credit income limits is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of household, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000.
For more information, please visit the IRS website.