Retirement by the Numbers: Employer Plans, IRAs and the Saver’s Credit

2020 Whole Ball Of Tax

Saving Opportunities Increase for Some Retirement Plans for 2020

Both IRA contribution levels and contribution limits to employer‑sponsored programs are subject to cost of living adjustments (COLAs). IRA contribution levels remained the same from 2019 to 2020.

The allowable adjusted gross income (AGI) parameters for IRAs increased for 2020. Income thresholds for 2020 also increased under the Retirement Savings Contributions Credit, commonly known as the Saver's Credit, which is a nonrefundable tax credit that allows lower‑ and middleincome retirement plan participants to use elective contributions to reduce their federal income tax.

Employer-sponsored Programs
Retirement Vehicle Maximum 2020
Employee Contribution*
Catch-up Contributions
401(k), 457 and 403(b) plans $19,000 — pre-tax dollars
(up $500 from 2019)
$6,000
(unchanged from 2019)
SIMPLE plans $13,500 — pre-tax dollars
(up to $500 from 2019)
$3,000
(unchanged from 2019)
SARSEP**
(Salary Reduction SEP)
$19,000 — pre-tax dollars
(unchanged from 2019)
$6,000
(unchanged from 2019)

IRAs***
Retirement Vehicle 2020 Maximum Contribution Limits* Catch-up Contributions Adjusted Gross
Income (AGI) Restrictions
Traditional Deductible IRA $6,000
(unchanged from 2019)
$1,000
(unchanged from 2019)

For active participants in employer provided plan:

Single filers: under $65,000 phasing out completely at $75,000 (under $64,000 phasing out completely at $74,000 for 2019)

Married filing jointly: under $104,000 phasing out completely at $124,000 (under $103,000 phasing out completely at $123,000 for 2019)

Traditional Nondeductible IRA $6,000
(unchanged from 2019)
$1,000
(unchanged from 2019)
N/A
Roth IRA Nondeductible $6,000
(unchanged from 2019)
$1,000
(unchanged from 2019)

Single filers: under $124,000 phasing out completely at $139,000 (under $122,000 phasing out completely at $137,000 for 2019)

Married filing jointly: under $196,000 phasing out completely at $206,000 (under $193,000 phasing out completely at $203,000 for 2020)

Retirement Savings Contributions Credit****
Retirement Vehicle 2020 Maximum Credit Adjusted Gross
Income (AGI) Restrictions
IRAs, Roth IRAs, SIMPLE Plans, 401(k)s and other qualified retirement plans

$1,000 for single filers

$2,000 for joint filers

Single filers: $32,500 or less ($32,000 for 2019)

Head of household filers: $48,750 or less ($48,000 for 2019)

Married filing jointly: $65,000 or less ($64,000 for 2019)

*Subject to COLAs.

**SARSEPs must have been established prior to January 1, 1997. The maximum contribution and catch-up amounts are the same as for 401(k), 457 and 403(b) plans.

***Individuals have generally until the tax filing deadline (April 15, 2020 to make contributions to their IRAs for 2019).

****Depending on AGI, the Retirement Savings Contribution Credit, commonly referred to as the Saver's Credit, provides a credit ranging from 10% to 50% with lower income taxpayers being eligible for a higher credit. For example, a married taxpayer filing jointly with an AGI of less than $38,500 making a $2,000 retirement plan contribution in 2019 could be eligible for a 50% credit, or $1,000. By contrast, if that same taxpayer had an AGI between $38,501 and $41,500, would be eligible for a 20% credit, or $400; an AGI between $41,501 and $64,000 would make that same taxpayer eligible for a 10% credit, or $200.

SOURCE: Wolters Kluwer, 2020
Permission for use granted.

More Information

Wolters Kluwer can assist you with stories and provide interviews with subject-matter experts.

Contact us

Visit the Whole Ball of Tax site often as new releases and other updates will be posted throughout the tax season.