What types of things should you be thinking about?
Employees Can Add More Money to Their IRA’s and 401k’s
The IRS will allow employees to contribute up to $19,500 for 401k’s. That’s up from $19,000 in 2019. Employees 50 or older can contribute an additional $6500. That’s up from $6000 in 2019.
The contribution limit for IRA’s remains the same at $6000. However, employees 50 years and older can contribute up to $7000 starting in 2020.
Simple IRA and Simple 401k plans will also increase in 2020. Employees can invest up to $13,500 in these plans next year. That’s a $500 increase from 2019. For employees 50 and over the contribution limit stays the same at $3000.
Profit-sharing plans like a SEP IRA, and cash balance plan will also see contribution limit increases in 2020. One of the major benefits of these plans is that contributions are made totally by the employer. The maximum contribution to these plans in 2020 is $57,000, up from $56,000 in 2019.
Health Care Savings Accounts
For employees that have health care savings accounts the contribution limit will increase slightly in 2020. Employees with individual coverage can save up to $3,550 in 2020. That’s a $50 increase up from $3,500 in 2019. Employees with family plans can save up to $7,100. A $100 increase up from $7,000 in 2019.
If you want more information on how to be prepared and other tax information, contact us today!