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Key Retirement and Tax Numbers for 2020

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans and various tax deduction, exclusion, exemption, and threshold amounts. Here are a few of the key adjustments for 2020.

Employer retirement plans

  • Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $19,500 in compensation in 2020 (up from $19,000 in 2019); employees age 50 and older can defer up to an additional $6,500 in 2020 (up from $6,000 in 2019).
  • Employees participating in a SIMPLE retirement plan can defer up to $13,500 in 2020 (up from $13,000 in 2019), and employees age 50 and older can defer up to an additional $3,000 in 2020 (the same as in 2019).

IRAs

The combined annual limit on contributions to traditional and Roth IRAs is $6,000 in 2020 (the same as in 2019), with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA phases out for the following modified adjusted gross income (MAGI) ranges:

20192020
Single/head of household (HOH)$64,000 – $74,000$65,000 – $75,000
Married filing jointly (MFJ)$103,000 – $123,000$104,000 – $124,000
Married filing separately (MFS)$0 – $10,000$0 – $10,000

The 2020 phaseout range is $196,000 – $206,000 (up from $193,000 – $203,000 in 2019) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.

The modified adjusted gross income phaseout ranges for individuals to make contributions to a Roth IRA are:

20192020
Single/HOH$122,000 – $137,000$124,000 – $139,000
MFJ$193,000 – $203,000$196,000 – $206,000
MFS$0 – $10,000$0 – $10,000

Estate and gift tax

  • The annual gift tax exclusion for 2020 is $15,000, the same as in 2019.
  • The gift and estate tax basic exclusion amount for 2020 is $11,580,000, up from $11,400,000 in 2019.

Kiddie tax

Under the kiddie tax rules, unearned income above $2,200 in 2020 (the same as in 2019) is taxed using the trust and estate income tax brackets. The kiddie tax rules apply to: (1) those under age 18, (2) those age 18 whose earned income doesn’t exceed one-half of their support, and (3) those ages 19 to 23 who are full-time students and whose earned income doesn’t exceed one-half of their support.

Standard deduction

20192020
Single$12,200$12,400
HOH$18,350$18,650
MFJ$24,400$24,800
MFS$12,200$12,400

The additional standard deduction amount for the blind or aged (age 65 or older) in 2020 is $1,650 (the same as in 2019) for single/HOH or $1,300 (the same as in 2019) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.

Alternative minimum tax (AMT)

20192020
Maximum AMT exemption amount
Single/HOH$71,700$72,900
MFJ$111,700$113,400
MFS$55,850$56,700
Exemption phaseout threshold
Single/HOH$510,300$518,400
MFJ$1,020,600$1,036,800
MFS$510,300$518,400
26% rate on AMTI* up to this amount, 28% rate on AMTI above this amount
MFS$97,400$98,950
All others$194,800$197,900
*Alternative minimum taxable income

Source: Broadridge

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