COLA 2020: Cost-of-Living Adjustments

TRI-AD presents the Cost-of-Living Adjustments (COLAs) for 2020. These limits are provided each year by the Internal Revenue Service and are effective as of January 1, 2020.

Download a Printable Copy

Retirement Cost-of-Living Adjustments
Maximum Dollar Limitations

Employee Deferral Limits

2020

2019 2018 2017

2016

401(k) Contribution

$19,500

19,000 18,500 18,000 18,000
403(b) Contribution

$19,500

19,000 18,500 18,000 18,000

457 Contribution

$19,500 19,000 18,500 18,000

18,000

SIMPLE 401(k)/IRA

$13,500 13,000 12,500 12,500

12,500

Employee Catch-Up Limits

401(k), 403(b), 457

$6,500 6,000 6,000 6,000 6,000

SIMPLE 401(k)/IRA

$3,000 3,000 3,000 3,000

3,000

Other Plan Limitations
Compensation Cap

$285,000

280,000 275,000 270,000 265,000
Defined Benefit Plan Maximum Benefit

$230,000

225,000 220,000 215,000

210,000

Defined Contribution Plan Maximum Contribution

$57,000

56,000 55,000 54,000

53,000

Highly Compensated Employees’ Compensation Exceeding

$130,000

125,000 120,000 120,000

120,000

Key Employee Officer Compensation

$185,000

180,000 175,000 175,000

170,000

Key Employee 1% Owner

$150,000

150,000 150,000 150,000

150,000

SEP Participation Coverage Compensation Level

$600

600 600 600

600

ESOP Threshold for 5-Year Distribution Period

$1,150,000

1,130,000 1,105,000 1,080,000

1,070,000

ESOP Incremental Threshold for Extending 5-Year Distribution Period (max 5 additional years)

$230,000 225,000 220,000 215,000

210,000

Social Security Taxable Wage Bases
– Social Security

$137,700

132,900 128,400 127,200

118,500

– Medicare

No Limit

No Limit No Limit No Limit

No Limit

Social Security Tax Rates By Percentage
– Social Security – Employer

6.20

6.20 6.20 6.20

6.20

– Social Security – Employee

6.20

6.20 6.20 6.20

6.20

– Medicare – Employer and Employee

1.45

1.45 1.45 1.45

1.45

– Per Employer/Per Employee Combined Rate

7.65

7.65 7.65 7.65

7.65

Combined Rate

15.30

15.30 15.30 15.30

15.30

Additional Medicare Tax on Wages above $200,000 – Employee Only

.9*

.9* .9* .9*

.9*

*The Affordable Care Act imposes an additional .9% Medicare tax on wages above $200,000 ($250,000 for married couples filing jointly, $125,000 for married couples filing separately and $200,000 for other filers). Employers are required to withhold the additional .9% Medicare tax (a total of 2.35%) on wages above $200,000 regardless of the employee’s tax filing status. Employers do not match this additional tax.

Health & Welfare Cost-of-Living Adjustments
Maximum Dollar Limitations

Health Care Reimbursement Accounts in a Cafeteria Plan

2020

2019 2018

2017

Maximum Contribution

$2,750

2,700 2,650

2,600

Dependent Care Reimbursement Accounts in a Cafeteria Plan
Maximum Contribution

$5,000

5,000 5,000

5,000

Maximum Contribution if Married Filing Separately

$2,500

2,500 2,500

2,500

Dependent Care Tax Credit on Personal Tax Return1
1 Qualifying Individual

$3,000

3,000 3,000

3,000

2 or more Qualifying Individuals

$6,000

6,000 6,000

6,000

Qualified Relative Income Allowance
Maximum Amount a qualified relative can earn and still be considered a dependent for tax purposes

$4,300

4,200 4,150

4,050

Qualified Transportation Plan2
Parking – Monthly Limit

$270

265 260

255

Transit Passes and Vanpooling (Combined) – Monthly Limit

$270

265 260

255

Bicycle benefit (Employer-funded) – Monthly Limit

$20

20 20

20

Adoption Assistance Program3
Maximum Exclusion for Employer-Provided Program4

$14,300

14,080 13,810

13,570

Adoption Tax Credit Limit

$14,300

14,080 13,810

13,570

Modified Adjusted Gross Income Limits for Employer-Provided
Adoption Assistance Program and Tax Credit

Full credit if adjusted gross income below

$214,520

211,160 207,140

203,540

Phased credit if adjusted gross income between

$214,520–
$254,520

211,160–
251,160
207,140–
247,140

203,540–
-243,540

No credit allowed for adjusted gross income above

$254,520

251,160 247,140

243,540

Educational Assistance Programs
Maximum nontaxable educational assistance benefit

$5,250

5,250 5,250

5,250

Health Savings Accounts

Contribution Limit per Individual

$3,550

3,500 3,450

3,400

Contribution Limit per Family

$7,100

7,000 6,900

6,750

Catch-up Contribution for Age 55 and Older

$1,000

1,000 1,000

1,000

Out-of-pocket Maximum per Individual

$6,900

6,750 6,650

6,550

Out-of-pocket Maximum per Family

$13,800

13,500 13,300

13,100

Minimum Deductible per Individual

$1,400

1,350 1,350

1,300

Minimum Deductible per Family

$2,800

2,700 2,700

2,600

Highly Compensated Employee Compensation Exceeding

$130,000

125,000 120,000

120,000

Key Employee Officer Compensation

$185,000

180,000 175,000

175,000

Key Employee 1% Owner

$150,000

150,000 150,000

150,000

1 Credit may be adjusted based on the level of the taxpayer’s adjusted gross income and is reduced by amounts excluded from income under a Dependent Care Reimbursement Account plan sponsored by an employer.
2 The Tax Cuts & Jobs Act of 2017 changed the bicycle benefit to a taxable benefit for years after 2017 and before 2026.
3
An employer-sponsored Adoption Assistance Program may be a stand-alone program or contained in a Cafeteria Plan.
4 If employer-sponsored Adoption Assistance Program is contained in a Cafeteria Plan, this is the maximum limit within the plan year.