401(k) changes coming in 2020
These provisions could help you save more
Ready to save more for retirement in 2020? A number of new provisions may make it easier to do so.
For starters, when it comes to 401(k) plans, savers will be able to contribute more money.
The contribution limit will increase to $19,500, from $19,000.
The catch-up contribution limit, for those aged 50 and over, will increase to $6,500 from $6,000.
Meanwhile, President Trump signed retirement reform legislation into law at the end of December. The so-called SECURE Act has some provisions that experts believe could also meaningfully help Americans stash away more money for retirement.
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One of those provisions is delaying when individuals are required to begin taking required minimum distributions to 72, from 70 1/2.
The SECURE Act also encourages the offering of annuity options within 401(k)s plans, which are fixed sums paid out over a lifetime. The annuity option could be particularly important for upcoming generations that may lack access to a pension.
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The legislation aims to increase access to retirement plans – addressing one of the biggest barriers to saving. Small businesses will be given tax credits under certain circumstances for having plans in place.
Another reason more small businesses may offer 401(k) plans – or other retirement accounts – starting next year is that the administration will make it easier for businesses to band together to offer multi-employer plans. Some businesses would be required to allow eligible part-time workers to participate.
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Another important change where IRA accounts are concerned, the SECURE Act will allow people to stash money into IRA accounts beyond the current age limit of 70 1/2.