2020 Contribution and Gift Limits

A handful of updates for 2020 IRA & 401k contribution and gift limits:

  • For Traditional IRAs and Roth IRAs the 2020 contribution maximum remains the SAME in 2020 as in 2019: $6,000 (plus $1,000 to total $7,000 for those age 50 and over).
  • REMEMBER!! IRA account contributions can be made all the way up until April 15th for the previous tax year.
  • That means that you have until April 15, 2020 to make an IRA contribution for 2019.
cash dollars hands money
Photo by Pixabay on Pexels.com

  • For 401k and 403b plans the 2020 contribution maximum goes UP to $19,500 (plus $6,500 to total $26,000 for those age 50 and over).
  • The deadline is the end of the calendar year, or Dec 31st, for making 401k and 403b contributions.
  • That means keep your eye on your accumulated contributions throughout the year and make adjustments as necessary by Dec 31st in order to max out.
  • REMEMBER!! Consider the Roth 401k or Roth 403b even for high wage earners. There is no cap on income for contributing to Roth 401k or Roth 403b.
  • For those who are self-employed and contributing to a SEP IRA, the 2020 contribution maximum goes up to $57,000 (or 25% of the employee’s compensation) from $56,000 in 2019.
  • Finally, the 2020 maximum limit on gifts to people (other than charity) also called the “gift tax exclusion” remains the SAME as 2019 at $15,000. Gifts, if given by parents, can be “doubled” if each parent gives the maximum of $15,000 then the recipient can receive $30,000.
  • REMEMBER: Gifts are NOT tax deductible for the giver.
  • Give generously and often!

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s