On November 6, the IRS Internal Revenue Service (IRS) announced increased deferral limits for 2020 for employer-sponsored supplemental retirement plans, including 457(b) and 401(k).1 This is great news — now you can tuck away more dollars for retirement while deferring income taxes.
Log on to FrontLinePlan.com and use My Interactive Retirement PlannerSM along with the table below to see the impact of increasing your contribution. If you have a retirement plan account with Nationwide, you may also schedule time with your local Retirement Specialist or contact Nationwide’s Retirement Resource Group at 888-401-5272 for assistance.
Remember, the beginning of the year is also a good time to check your retirement readiness and make sure your beneficiary designations are up to date.
|Type||2020||2019||2020 pre-tax/per pay max (26 pays)||Per-pay reduction *|
|457(b) Annual Limit||$19,500||$19,000||$750||$562|
|457(b) Over Age 50 Catch-Up||$26,000||$25,000||$1,000||$750|
|457(b) Special Catch-Up||$39,000||$38,000||$1,500||$1,125|
|401(a) Defined Contribution||$57,000||$56,000||N/A||N/A|
|401(k) Annual Limit||$19,500||$19,000||$750||$562|
|401(k) Over Age 50 Catch-Up||$26,000||$25,000||$1,000||$750|
|Roth IRA **||$6,000||$6,000||N/A||N/A|
Please note: Special 457(b) catch-up contributions, if permitted by the plan, allow a participant for three years prior to the normal retirement age (as specified in the plan) to contribute the lesser of:
- Twice the annual limit ($39,000 in 2020 and $38,000 in 2019)
- The basic annual limit, plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions)
* Assumes 25% tax rate
1 Source: IRS Announces 2020 Pension Plan Limitations, IR-2019-179, Nov. 6, 2019.
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Retirement Specialists are registered representatives of Nationwide Investment Services Corporation: Member FINRA. Nationwide representatives cannot offer investment, tax or legal advice. Consult your own counsel before making retirement plan decisions.
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