In guidance released Wednesday, the InternalRevenue Service said employees in 401(k) plans will be able tocontribute as much as $19,500 in 2020. Participants in 401(k),403(b), most 457 plans, and the federal government's Thrift SavingsPlan will see that contribution limit increased from $19,000 in2019.

The guidance introduced several other changes as well: Thecatch-up contribution limit for employees 50 and older whoparticipate in these plans will increase to $6,500, from $6,000.The limitation on SIMPLE retirement account contributions willincrease from $13,000 for 2019 to $13,500 for 2020. In addition,income ranges used to determine eligibility for making deductiblecontributions to traditional IRAs, contributing to Roth IRAs, andclaiming the Saver's Credit will all increase for 2020.

According to the guidance, taxpayers can deduct contributions toa traditional IRA by meeting certain conditions. If the taxpayer—orhis or her spouse—was covered by a retirement plan at work duringthe year, the deduction may be reduced, or phased out, until it iseliminated, depending on filing status and income. If neither thetaxpayer, nor his or her spouse, was covered by a retirement planat work, the phase-outs of the deduction do not apply.

These are the phase-out ranges for 2020:

• Single taxpayers covered by a workplace retirement plan:$65,000 to $75,000, up from $64,000 to $74,000
• Married couples filing jointly, where the spouse making the IRAcontribution is covered by a workplace retirement plan: $104,000 to$124,000, up from $103,000 to $123,000
• IRA contributor who is not covered by a workplace retirementplan and is married to someone who is covered: The deduction isphased out if the couple's income is between $196,000 and $206,000,up from $193,000 and $203,000
• Married individual filing a separate return who is covered by aworkplace retirement plan: The phase-out range is not subject to anannual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers contributing to a RothIRA is $124,000 to $139,000 for singles and heads of household, upfrom $122,000 to $137,000. For married couples filing jointly, itis $196,000 to $206,000, up from $193,000 to $203,000. Thephase-out range for a married individual filing a separate returnwho makes contributions to a Roth IRA is not subject to an annualcost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver's Credit—a.k.a., RetirementSavings Contributions Credit—for low- and moderate-income workersis $65,000 for married couples filing jointly, up from $64,000;$48,750 for heads of household, up from $48,000; and $32,500 forsingles and married individuals filing separately, up from$32,000.

The limit on annual contributions to an IRA remains unchanged at$6,000. The additional catch-up contribution limit for individualsaged 50 and over is not subject to an annual cost-of-livingadjustment and remains $1,000.

From: ThinkAdvisor