Employee Benefits, Flexible Spending Accounts, Health Reimbursement Arrangements, Pre-Tax Commuter Plans, Retirement Plan Services

IRS 2020 Contributions Limits: What’s Changing

The IRS 2020 contribution limits were released on November 6, 2019. Here’s what’s changing for certain employee benefit plans beginning January 1, 2020.

2020 Contribution Limits for FSAs

Health FSA 

For 2020, the Health Flexible Spending Account annual maximum contribution will increase by $50 to $2,750 per plan year. 

Adoption Assistance FSA

The maximum amount that may be excluded from an employee’s gross income under an Adoption Assistance FSA will increase to $14,300.


Commuter Plan – Parking & Transit Account

This year, the Parking & Transit Accounts saw a nominal increase; both accounts will increase by $5 to $270.


Qualified Small Employer Health Reimbursement Arrangement

Under a qualified small employer Health Reimbursement Arrangement, the total amount of payments and reimbursements cannot exceed a certain dollar amount. The 2020 IRS limits are $5,250 for individual coverage and $10,600 for family coverage.


2020 IRS Plan Limits for Retirement Plans

The limitation used in the definition of highly compensated employees for 2020 will increase from $125,000 to $130,000. Additionally, certain retirement plans will see the following updates:

401(k), 403(b) and most 457 plans

  • The 2020 elective deferral limit will increase to $19,500.
  • The catch-up contribution limit for employees ages 50 and over who participate in 401(k), 403(b), and most 457 plans will increase to $6,500.

IRAs

  • The contribution limit and the catch-up contribution remains unchanged.  The IRA annual contribution continues at $6,000 and the catch-up contribution limit continues at $1,000.

Overview of Changes

Plan Type2019 Limits2020 Limits
Health Flexible Spending Account$2,700 annual contribution $2,750 annual contribution
Adoption Assistance Flexible Spending Account$14,080 annual contribution $14,300 annual contribution
Parking Plan$265 monthly contribution $270 monthly contribution
Transit Plan $265 monthly contribution $270 monthly contribution
Qualified Small Employer Health Reimbursement Arrangement $5,150 for individual coverage/$10,450 family coverage $5,250 for individual coverage/$10,600 family coverage
Health Savings Account – Contribution Limit$3,500 annual contribution for individual coverage/$7,000 for family coverage$3,550 annual contribution for individual coverage/$7,100 for family coverage
Health Savings Account – Annual HDHP Minimum Deductible$1,350 for individual coverage/$2,700 for family coverage$1,400 for individual coverage/$2,800 for family coverage
Health Savings Account- Out-of-Pocket Maximums $6,750 for individual coverage/$13,500 for family coverage $6,900 for individual coverage/$13,800 for family coverage
401(k)/403(b)/457 Plans$19,000 elective deferral limit $19,500 elective deferral limit
401(k)/403(b)/457 Plans $6,000 contribution limit $6,500 contribution limit
IRAs$6,000 contribution limitno change; $6,000 contribution limit
IRAs$1,000 catch-up contribution limitno change; $1,000 catch-up contribution limit

For more information, please refer to IRS Revenue Procedure 2019-44 or Notice 2019-59.

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