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.
- 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!