The Internal Revenue Service recently announced the new pension plan contribution limits for 2020. While there are many different limits that impact pension plans, the main limits that effect participants in the Ministers’ Retirement Plan are as follows:
- The salary reduction limit for 2020 will be $19,500. This limit is available to all participants regardless of age.
- The catch-up contribution for individuals age 50 or over will be $6,500 per year.
- The overall contribution limit for 2020, not taking into consideration the age 50 or over catch-up contribution provision, will increase to $57,000 annually.
- If a participant is 50 years of age or older, his or her maximum contribution limit in 2020 will be $63,500 after combining the regular limit with the catch-up limits.
A contribution limit worksheet is available on our website for participants to use to calculate their maximum contributions for 2020.
It is important to remember that the old “20% of salary” limits are no longer applicable. Now the limits are strictly dollar limits as set out above. Further, regardless of the limits, a participant is always limited by the amount of their taxable income.