401(k) Limits Are Rising in 2020 & How to Maximize Your Savings
’Tis the season for the U.S. Internal Revenue Service to make its annual inflation adjustments to a variety of tax rates and limits, including higher estate and gift tax limits for 2020. In the coming year, individuals will be able to gift or exclude from federal estate taxes a total of $11.58 million—up from $11.4 million in 2019. The annual gift tax exclusion—the amount you can give to heirs each year without reporting a gift—remains at $15,000.
The IRS also lifted the annual limit that can be contributed to a defined contribution (401(k) or similar) plan from $19,000 to $19,500, and people 50 or older can make a total of $26,000 including their catch-up additional contributions of $6,500—up from 2019’s $6,000. The amount you can contribute to an Individual Retirement Account is unchanged at $6,000, with a $1,000 catchup limit for people 50 and older.
If an employer allows after-tax contributions, or if you’re self-employed, the overall defined contribution plan limit was raised from $56,000 to $57,000.
The IRS also changed the tax brackets for working Americans, raising slightly the thresholds for the 10%, 12%, 22%, 24%, 32%, 35% and 37% rates, and raised the standard deduction to $12,400—$24,800 for married people filing jointly in 2020.
Sam G Huszczo, CFA, CFP was back on the NYSE trading floor attempting to temper the somewhat “Irrational Exuberance” of the Stock Market. 81% of U.S. companies to list in 2018 did so with negative 12-month trailing earnings on the day they went public, the highest such figure since the “irrational exuberance” of the tech bubble.
Check Out the Full Interview in the first link below on Cheddar TV: