401K News - April 2020
Americans will be able to save just a little bit more in some of their retirement accounts.
The IRS has raised the amount you can put into a 401(k) or 403(b) to $19,500 in 2020.
The Internal Revenue Service announced it is increasing its 401(k), 403(b) deferred contribution limit to $19,500 next year, up from $19,000 in 2019. Catch up contributions are also jumping $500, to $6,500 in 2020, which means that Americans 50 years and older can contribute a total of $26,000 in 2020.
The total contribution limit to 401(k) and similar plans increased to $57,000, up from $56,000, and would include employee contributions as well as employer contributions.
Many Americans don't max out their 401(k) plans. Only 13% of participants did so in 2017, when the limit was $18,000, according to a 2018 Vanguard report about its investors, and they were typically participants who had higher incomes, were older and had a longer tenure at their employers. Comparatively, 9.1% of Fidelity investors with a 401(k) plan had maxed out their accounts in 2018, up from 9% in 2017 and 8.1% at the end of 2013.